News Arnulf Hinkel, financial journalist – 01.05.2021
Figure of the month
According to the World Gold Council, a total of about 197,575.7 tonnes of gold had been mined by the beginning of 2021 since the early Copper Age, which is a period spanning roughly 6,300 years. Back then, gold nuggets were more likely to be sought out on the ground and in riverbeds or simply collected than purposefully extracted from below the earth’s surface. The gold mine of Sakdrissi in Georgia is considered the first professional extraction facility, having started operations around 5,000 years ago. The German precious metals online portal Gold.de estimates that the entire mass of gold mined to date, if melted down, would yield a cube with a side length of no more than 21.71 metres. This astonishingly compact size is due to the precious metal’s extremely high density.
Gold mainly used for jewellery and watches
As to the use of the nearly indestructible precious metal, which is not affected by aging, little has changed since its discovery. The lion’s share is still used for the production of jewellery, watches and ornaments, a full 47 per cent to date. Gold as been a common means of payment in standardised coins only for the past 2,500 years.
Store of value and currency reserve
The second most common use of gold today is as a store of value, at 21.6 per cent. This includes gold coins and bars of all sizes in private households or bank safe-deposit boxes as well as the 12.4 kg good-delivery gold bars that institutional investors usually store, e.g. to back their gold funds or gold ETCs with physical gold or simply as a portfolio-stabilising element in their own investments.
Most governments also invest in gold as an important foreign exchange reserve alongside the US dollar, euro, Swiss franc or Japanese yen. This makes central banks the third-largest consumers of the precious metal worldwide, accounting for 17.2 per cent of the total gold mined to date.
Valuable resource for technology and medical purposes
The remaining 14.2 per cent of the gold thus far mined go to a wide variety of purposes. In industrial production, for example, it is an important catalyst in chemical processes. It is also used to a considerable extent in the automotive and aviation industries as well as in security technologies, and is indispensable when it comes to wireless communication technologies, thanks to its properties as an ideal, non-corrosive conductor. Whether it is in smartphones, smart homes or intelligent wearables – gold almost always plays a vital role.
In medicine, the precious metal is used in research and as a component of rapid tests, e.g. to detect epidemics or pandemics. It is also used in the treatment of inflammatory diseases such as rheumatism.
Will the existing gold deposits ever be exhausted?
According to World Gold Council data, gold deposits amounting to almost 50,000 tonnes are currently still waiting to be extracted in fully developed and operational gold mines. With up to 4,000 tonnes of gold mined annually in recent years, these reserves would be exhausted within the next 12 years. However, this does not mean the end of gold production: the bottom of the sea alone holds a treasure of at least 10 million tonnes. Mining may still be technically impossible, but China, the country with the largest production volume, announced several years ago that it intends to start mining gold in the Indian and Pacific Oceans by 2030 at the latest. And traditional mining is no longer the only source. Recycling of scrap gold and urban mining already accounts for more than a quarter of the annual gold production, and this rate continues to grow. While 100 per cent of scrap gold from coins, jewellery, dental fillings and residues from chemical plants are commonly recycled, urban mining – i.e. the recovery of gold from e-waste and vehicles – still shows significant optimisation potential. In terms of the carbon footprint of gold production, it is extremely important to push recycling as much as possible. The traditional production of one kilo of gold causes 12 to 16 tonnes of CO2 emissions, even with the most modern, environmentally friendly technologies in gold mining. By comparison, one kilo of gold from recovered scrap gold, recycled at 100 per cent, causes only 53 kg of CO2 emissions, with an impact on the atmosphere from greenhouse gases that is thus around 200 times lower than from traditional gold mining.