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About Gold

Introduction


Gold has been a highly valued and sought after metal for several millennia. Throughout human history the precious metal has been used in coinage, jewelry and artistic displays of wealth. Gold artifacts dating back to the 4th millennium BC have been found in the Balkans and the earliest known map, the Turin Papyrus Map, shows the plan of a gold mine in Nubia together with indications of the local geology.

Gold is the most malleable and ductile metal known. A single gram of the yellow metal can be beaten into a sheet of 1 square meter, or an ounce into 300 square feet. Gold is also very dense; a cubic meter weighs 19,300 kg.

Gold resists attacks by individual acids, but it can be dissolved by nitro-hydrochloric acid. The yellow metal also dissolves in alkaline solutions of cyanide, used in mining; in mercury, forming amalgam alloys.

Gold readily creates alloys with many other metals to modify the hardness and other metallurgical properties of those metals, to control melting point or to create exotic colors. Gold is a good conductor of heat and electricity and strongly reflects infrared radiation.

Its advantageous properties including high malleability, ductility, resistance to corrosion and most other chemical reactions as well as high conductivity of electricity make gold a useful metal for many industrial applications.

Gold occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Although less commonly, it also occurs in minerals as gold compounds, usually with tellurium. It appears most often as a gold-silver alloy, typically with a silver content of 8% to 10%.

Gold ore typically occurs in lode deposits together with quartz or sulfide minerals such as pyrite. It is also found in placer, or alluvial, deposits in the form of free flakes, grains or larger nuggets that have been eroded from rocks.

Mining, recovery and beneficiation


Gold mining and extraction costs vary widely depending on mining type and ore quality. In recent years, costs have been in the range of $250/oz to $350/oz.

Typically, ore grades in open-pit mines are 1 to 5 mg/kg (1 to 5 parts per million or ppm) and ore grades in underground or hard rock mines are usually at least 3 mg/kg (3 ppm); however, ore grades as small as 0.5 mg/kg (0.5 ppm) can be mined economically.

In the distant past, gold mining techniques consisted of simple gold panning and sluicing, or Placer techniques, resulting in direct recovery of small gold nuggets and flakes. During the Californian gold rush era, hydraulic mining was widely used, which involved high-pressure jets of water to break down alluvial deposits. In the modern era, gold mining operations have consisted of using open-pit and/or sub-surface mining techniques on hard rock ores.

Following initial production, the precious metal is often refined industrially by the Wohlwill process (based on electrolysis) or by the Miller process (chlorination). While the Wohlwill process results in higher purity, it is more complex and only applied in small-scale installations. Other methods include parting and inquartation as well as cupellation, or refining methods based on the dissolution of gold in nitro-hydrochloric acid.

Once mined, the ore can be treated using a dump leaching or heap leaching processes. High grade ores and those resistant to cyanide leaching require further processing with techniques such as grinding, concentration, roasting and pressure oxidation prior to cyanidation.

If the gold can not be concentrated for smelting, then it is leached by an aqueous solution, the cyanide process being the industry standard.

However, ore containing sulfide minerals, organic carbon, or both, known as refractory gold, is naturally resistant to recovery by standard cyanidation and carbon adsorption processes; thus, it requires pre-treatment in order for cyanidation to be effective. Pre-treatment options for refractory ores include roasting, bio-oxidation, pressure oxidation and ultrafine grinding.

World production and supply of gold


Gold producing mines can be found on every continent except Antarctica, where mining is prohibited. From the dawn of the 20th century until recently, South Africa has been the world's largest producer of gold, with approximately half of all gold ever produced having come from the African nation. In 2007, China surpassed South Africa as the world's largest gold producer. Other major producers include the United States, Australia, Russia and Peru.

Currently, the overall level of global mine production is relatively stable. According to the World Gold Council, "supply has averaged approximately 2,497 tonnes per year over the last several years." Because a single mine can take up to 10 years to come through exploration to production, mining output is relatively inelastic and unresponsive to short term demand and price fluctuations. "Even a sustained price rally, as experienced by gold over the last seven years, doesn't translate easily into increased production."

World consumption of gold


Three primary markets are responsible for the majority of world gold consumption: jewelry (50%), investment (40%) and industry (10%).

Between Q4 2005 and Q3 2010, the World Gold Council estimates year average jewelry, investment and industrial demand at 2,151 tonnes, 1,182 tonnes and 433 tonnes, respectively.

Traditionally, India's cultural affinity for gold jewelry has made it the world's largest consumer and largest importer of the precious metal. Indians purchase about 800 tonnes a year, of which 400 tonnes is imported. However, gold as an investment vehicle is also gaining significant appeal in the South Asian nation.

The World Gold Council estimates that growing investment demand worldwide has represented the strongest source of increased gold demand since 2003, attracting net inflows of approximately $41 billion in 2009. Historically, gold has been viewed as a store of wealth and insurance against economic instability, making exploding demand for gold since the 2008 Crash no surprise.

Gold Prices


The price of gold is determined through trading in the gold and derivatives markets. Given the standing of the US dollar as the world's reserve currency, traders typically quote the US dollar price.

The London afternoon gold price fix is often used as a global benchmark because it represents maximum trade volumes adjusting for differences in time zones for US, European, Middle Eastern and African market activity. London has been a metals trading center since the late 17th century and is considered the birthplace of the official gold price. In 1717, the Master of the Mint in London, Sir Isaac Newton set the gold price at £4.25 per troy, a value that remained mostly unchanged for the next two centuries.

Gold's price reached a then record high of $850/oz in January of 1980, dropping to as low as $253/oz in June of 1999. Since 2001, the price of gold has been rapidly rising and on January 3, 2008, finally broke the record high achieved in 1980. By March 2008, gold was trading well over a $1,000/oz. Fueled by increasing global economic woes and a weakening US dollar, the price of gold broke $1200/oz in December of 2009. By September 2011, the price of gold had reached an all time high of $1923/oz.