- Gold is a relatively rare precious metal and 190,000 tons of it has been mined on earth.
- Gold’s unique, bright-yellow appearance distinguishes it from other useful precious metals. It’s widely used because it doesn’t corrode or rust and it’s a perfect material for conducting electricity.
- If current global mining rates continue, we could run out of new gold in just 20 years.
- Visit Business Insider’s homepage for more stories.
Following is a transcript of the video.
Narrator: Gold is the shining embodiment of wealth. Not only is it used to make expensive products, but it’s also used to add extra bling to luxurious items, from smartphones, to supercars, and even beef steaks. But other metals that are rarer than gold are much cheaper. So, why is gold so expensive?
Scientists believe gold arrived on Earth after the collision of two neutron stars in space forged gold atoms together into meteorites, which crashed into Earth about 3.9 billion years ago. Over millions of years, Earth’s bubbling hot core forced gold nuggets towards the surface. Gold flakes have been found in Paleolithic caves estimated to date back roughly 40,000 years, marking the first known instance of human contact with the material. But what exactly is gold?
Gold is a relatively rare metal with lots of versatility. It’s highly malleable, meaning it can be deformed or changed without fracturing the material. But what distinguishes it from other useful precious metals is its totally unique bright-yellow appearance. These factors give gold many practical and superficial uses on Earth.
Alistair Hewitt: If you’re a bride, gold is the perfect embodiment of love and emotion. If you’re an investor, gold’s an excellent portfolio-diversification tool. People like to know that they have got an element of their wealth which they can feel. Often, it looks beautiful, it’s got a wonderful design on it, and that adds a degree of emotion to the investment. And if you’re a manufacturer or if you’re someone making smartphones or tablets, gold is an element with the symbol Au and the atomic number 79, viewed as the most noble of all of the noble metals. It’s a perfect material for conducting electricity. And it doesn’t corrode; it doesn’t rust. So it’s great to have in your product.
Narrator: Over many centuries, civilizations across the globe became enamoured with the beautiful metal, such as the ancient Egyptians. Not only did they use it as a currency, they also buried themselves in gold, believing it to be the flesh of the gods. In fact, King Tutankhamun was laid to rest in three gold-wrapped coffins, the innermost of which was made from sheets of pure, beaten gold, which would now be worth over $US1 million.
In 1792, the US Congress passed the Coinage Act, which established a fixed price of gold to US dollars. Over the next century, gold mining captured people’s imagination, during the great US gold rush. The first was in 1799, after 12-year-old Conrad Reed discovered a huge, 17-pound gold nugget on his family’s farm in North Carolina. Fifty years later, in 1849, tens of thousands of prospectors, known as the 49ers, raced to San Francisco in search of riches, giving name to the San Francisco 49ers football franchise.
These gold rushes heralded the start of modern-day gold mining. Despite humans mining gold for millennia, the complexity of this process hasn’t changed.
Hewitt: Mining is just as challenging and difficult as it’s ever been before. What’s changed, probably, is the labour intensity in some mines, as people have increasingly used technology. But some of the challenges aren’t necessarily associated purely with mine production. They could be associated with the environments within which they’re operating, so. And licenses that people need to operate, whether it’s a formal licence from a government or a social licence from a local community. I mean, those are still challenges that mining companies need to navigate and kind of work their way through. And that contributes to the complexity of mine production today, probably just as much as it did many, many years ago.
Narrator: Identifying gold mines is a daunting task. It can take up to 10 years for geologists, chemists, and engineers to examine a potential site. And even then, the likelihood of a mine being developed into a productive gold mine is less than 0.1%. Only 10% of these sites contain enough gold to justify further development.
But aboveground, gold is everywhere. On our fingers, around our necks, and even in our mouths. Gold is used in medicine, architecture, and almost every electronic component. We even launch gold back out into the universe from where it came, not only as a reliable component of spacecraft circuitry, but also in the lining of astronauts’ visors to protect them from the sun’s harmful heat and ultraviolet light. So, with all that in mind, it might surprise you to know how little gold there actually is here on Earth. If you melted down the world’s entire aboveground stock of around 190,000 tons of gold, it would form a 72-foot cube. However, if that was divided up equally for every person on Earth, we’d all get roughly an ounce of pure, 24 karat gold each. That’s about $US1,500 worth. So, how does this volume divide out into different industries?
Hewitt: If we have a look at the 190,000 tons of stock of gold aboveground, the lion’s share of it’s in jewellery. Around about 50% of it is in jewellery. The next level down comes to private investment. So, that could be individuals holding bars or coins, or, indeed, individuals holding a share of an exchange-traded fund. And then you’ve got central banks. Central banks account for around about 17% of that stock of gold, so a very significant volume. And then the final element, around about 13%, 14%, is technology or dentistry.
Narrator: Is the future of gold as bright as its surface? New deposits of gold are increasingly hard to come by and increasingly difficult to locate. Geologists have estimated that only 55 tons remains buried away in the Earth’s crust. Which means, if current global mining rates continued, we could run out of newfound gold in just 20 years. So, as gold mining continues to slow and the costs associated with mining increase to meet the challenge of extraction, gold could become even more expensive.