Gold is the ultimate embodiment of wealth. Not only is it used for making luxurious items like jewelry, watches, artifacts and more, but it is also often used to add extra bling to luxury items, ranging from smartphones to supercars and even our food.
But other rarer metals than gold are far cheaper. Why is gold so costly, then?
How did gold reach earth?
Scientists believe that gold came to Earth when two neutron stars collided together in space fused gold atoms into meteorites, which crashed into Earth around 3.9 billion years ago. For millions of years, Earth’s bubbling hot heart has pushed gold nuggets to the surface. Gold flakes have been found in Palaeolithic caves, estimated to date back approximately 40,000 years, representing the first known human contact with the stone.
But what exactly is gold?
Gold is a fairly rare metal with plenty of uses on earth. It is extremely malleable, meaning that the metal can be deformed or modified without fracturing it. But what separates it from other valuable precious metals is its bright-yellow color which is unique. Such factors offer various practical and superficial uses of gold on Earth. If you’re a bride, gold is a perfect embodiment of love and passion. Gold is an excellent portfolio diversification tool if you are an investor. People feel a sense of calmness knowing that they have a portion of their wealth that they can touch. Sometimes, it looks gorgeous, it has a beautiful design on it, and it brings a certain amount of emotion to the investment. And if you’re a maker or someone who produces smartphones or tablets, gold is an element with the Au symbol and the atomic number 79, known as the noblest of all the noble metals. It’s the perfect material to conduct electricity. As it does not erode or rust, it becomes a great metal to work with and produce various tech peripherals.
Historical use of gold
Civilizations around the globe have been enamored with the exquisite metal, such as the ancient Egyptians, for many centuries. Not only did they use it as a currency, they buried themselves in gold, claiming it to be the flesh of the gods.
King Tutankhamun was laid to rest in three gold-wrapped coffins, the innermost of which was made of solid, beaten gold sheets, which would now be worth more than $1 million.
How difficult is gold mining?
Mining is as demanding and difficult as ever before. What has improved, possibly, is the labor intensity of some mines, as people have increasingly used technology. But some of the problems are not necessarily linked to mine production alone. They might be correlated with the environments in which the mining has to be done.
And the permits needed to start mining in an area that has to be issued by the government or the local authorities. These complexities have long existed, and that contributes to the difficulty of today’s mine production, perhaps just as much as it did many, many years ago. The detection of gold mines is a daunting task. It may take up to 10 years for geologists, chemists, and engineers to analyze a potential site. Even then, the probability of a mine turning into a profitable gold mine is less than 0.1%. Only 10% of these sites contain enough gold to warrant further production.
How much gold is there?
Yet gold is everywhere above ground. On our hands, on the chest and even in our mouths. Gold is used in medicine, furniture, and almost all electronic components. We also sent gold back to space, through space shuttles from where it came from, not only as a robust part of spacecraft electronics but also in the lining of astronaut’s helmet shields to protect them from harmful sunlight and ultraviolet light.
So, with all that in mind, it might come as a surprise to you to know how little gold there is on Earth. If you had melted down the entire world’s overground stock of about 190,000 tons of gold, it would have been a 72-foot cube. Nevertheless, if it were divided equally for every person on Earth, we would all get about an ounce of pure, 24-carat gold each. That’s about $1,500 worth of money.
Use of gold in various industries
So, how does this volume split up into various industries? When we look at the 190,000 tons of gold-stock above the ground, the lion’s share of it is in jewelry. Around 50 percent of it is in jewelry. The next level down is private investment. This could be individuals holding bars or coins, or, perhaps, individuals holding a share of an exchange-traded fund. And then you have the central banks. Central banks account for about 17 percent of that gold stock, which is a very significant amount. And then the final item, about 13 percent – 14 percent, is technology or dentistry.
What Is the future of gold?
New gold reserves are becoming increasingly difficult to detect and increasingly difficult to find. Geologists estimate that only 55,000 tons remain buried in the crust of the Earth. That means that if current global mining trends were to proceed, we might run out of newly discovered gold in just 20 years.
If gold mining continues to slow down and the costs associated with mining rise to meet the extraction challenge, gold could become even more costly.