Janet Briaud wrote in the Wall Street Journal: “Throughout history, gold has been valuable to humans of all cultures. Consider how the Spanish conquistadors encountered cultures that also treasured gold. These were two independent civilizations, on what then were completely opposite ends of the Earth, yet both valued this same shiny yellow metal. In other words, gold was treasured long before the invention of stocks, bonds, fiat currencies, credit default swaps, collateralized debt obligations and the like. [Source: Janet Briaud,Wall Street Journal, March 14, 2011; Ms. Briaud is a certified financial planner and a partner at Briaud Financial Advisors in Bryan, Texas.]

Gold is not the rarest or most valuable metal but it is certainly the most famous and historically sought after. It is 40 times more valuable than silver but less valuable than platinum and other rare metals. Pure gold is twice as heavy as lead and soft enough to cut with a knife. Its malleability is greatly prized by jewelers. [Source: Peter White, National Geographic January 1974]

All the gold ever mined would occupy a cube, 18.3 meters on each side and small enough to fit under the base of the Eiffel Tower or squeeze into 30 train box cars. On average you need to crush three tons of gold ore to extract one ounce of gold. Pure gold is 24 carats. Eighteen carat gold is one forth other metals.

All the gold on the earth and in the universe was originally created by supernovas. Only a massive stellar explosion produces enough energy to fuse the necessary number of protons, neutron and electrons into a gold atom. After they were created these atoms floated through the universe and eventually combine with other particles to form interstellar globs of material. In some places enough of these globs coalesced to form planets. On our planet geological processes that transpired over millions of years in the earth's mantle and core sorted out and brought together enough gold atoms in some places to be mined.

Most gold that is mined today is used for jewelry, perhaps because of its beauty, or perhaps because it doesn't rust or corrode. Other uses for gold include tooth filings, electronics manufacturing and collectibles, but these make up a very small portion of overall demand.

Websites and Resources: World Gold Council ; Gold Mining ; Wikipedia article Wikipedia ; Sources: Federal Reserve Bank of New York, The Key to the Gold Vault; Jeff Garrett and Ron Guth, Encyclopedia of U.S. Gold Coins, 1795-1933; World Gold Council, Gold Demand Trends'; The Ages of Gold by Timothy Green (GFMS Ltd., 2007)

Spot price sources: ; To get the New York Mercantile Exchange you will have to agree to a disclaimer but not provide any information.

Mineral and Energy Production : United States Geological Survey (USGS) Minerals Resources Program ; Index Mundi ; Energy Information Administration, Department of Energy ; Nationmaster ;

Websites and Resources on Mining: ; Wikipedia article Wikipedia ; Mining Engineering ; Geology and Hard Rock Mining ; Mining technology ; National Mining Association

Websites and Resources on Minerals: Mineralogy Database ; Minerals and Gemstone Kingdom ; ; Minerals Atlas ;

Value of Gold

About 70 percent of the gold in the United States is used in jewelry and the arts, 23 percent is used in the electronics and other industries and 7 percent in dentistry. In many parts of the world, particularly in India, China and the Middle East, people have traditionally bought gold---often in the form of bracelets or necklaces or some other kind of women’s jewelry---as a hedge against currency weaknesses, inflation and financial instability. Governments control about a forth of eh above ground gold reserves.

In addition to providing a lustrous material for jewelry and tooth fillings, gold has thousands of other uses. The plastic visor on a space suit, for example, is coated with gold because it reflects ultraviolet light and can be spreads so thin light can pass through it. The electronic industry likes gold because it is malleable, it doesn't corrode and it is a good conductor of electricity. You'd be hard pressed to find a computer, television or car stereo without some gold it in somewhere. Gold is being studied as method for detecting breast cancer. Scientists say that “nanoparticles” of gold could be attached to tumor cells as a guide for laser shots.

The gold jewelry market was valued at $38 billion in 2005. Major buyers include China, India and Turkey. On the purchase of gold jewelry one jeweler told the Washington Post, “For certain unique purchases in one’s life, people don’t want to feel they’re sacrificing.” But “there’s a higher investment that needs to be made for them to get the products they desire.”

On the attraction of gold, Andrea Nichols of Smithsonian Museum of African Art told Newsweek, “There’s status, there’s prestige, there’s the notion of wealth---people like gold.” Gold has a long association with rank and privilege . Charles Spencer, an anthropologist with the American Museum of Natural History told Newsweek, “Societies that used gold as ornamentation and, money...were societies that had social stratification. Even in our own culture, that’s how gold operates....Gold is not inherently valuable...What gives gold value is culture.”

These days there are many good gold substitutes. In a test the patriarch of the Russian Orthodox Church was reportedly given two metals and asked which one was gold: he chose the one made of titanium nitrate sprayed with gold lacquer.

There’s no doubting the allure of metal that has decorated kings, sparked mad voyages and legends, and is still deemed important enough by dozens of foreign governments to hide beneath New York. “It’s an incredibly sought after piece of metal that’s so rare,” said Harry Pell, 34, a teacher, told AFP. “Our wedding rings are still made of gold after all.” Leonardo Blake, 53, said, “People think it’s a magic metal that opens doors---and in a sense it is.” [Source: AFP, August 1, 2011]

What Is Rarer Than Gold?

Smithsonian magazine reported: “Why gold?..Gold really isn’t all that special. There are far more useful elements out there. And several that are rarer than gold are listed below. All of these, like gold, are noble metals, meaning that they are resistant to corrosion. [Source: Smithsonian magazine, Surprising Science, August 8, 2011]

“1) Platinum (Pt): Most familiar for its use in jewelry, platinum is more often used in the systems that control vehicle emissions in our cars. Other uses include electronics, spark plugs and in drugs to treat cancer. 2) Palladium (Pd): Palladium is similar to platinum in both appearance and in use; it appears in vehicle emissions equipment and electronics. It’s also a key component in fuel cells. 3) Ruthenium (Ru): Like platinum and palladium, ruthenium is a silvery metal that does not easily tarnish. It is used as a catalyst and to harden those other similar metals, platinum and palladium. [Ibid]

“4) Rhenium (Re): The last of the naturally occurring elements to be discovered, this silvery metal is used in small amounts with nickel in jet engines. Rhenium isotopes are used to treat liver cancer. 5) Rhodium (Rh): Some white gold and sterling silver jewelry is plated with rhodium, which improves its appearance. It is also used in aircraft spark plugs, fountain pens and mammography systems. 6) Osmium (Os): The densest of natural elements---twice as dense as lead---this blue-grey metal finds a home in applications where hardness and durability are essential. Applications include surgical implants, electrical contacts and the tips of fountain pens. [Ibid]

“&) Iridium (Ir): If iridium sounds familiar, that might be because there’s a group of communications satellites named after this element, a hard, brittle and dense metal. Or it could be because the K-T boundary that marks the geologic end of the dinosaurs is laced with iridium; the metal is more common in asteroids and meteorites than in the Earth’s crust. Iridium can also be found in crystals in computer memory devices, deep-water pipes, X-ray telescopes and the equipment that makes rayon fibers. [Ibid]

Gold Originating from Outer Space

Elizabeth Svoboda wrote in Discover magazine: Platinum, gold and some other valuable metals “most likely arrived on Earth in a furious meteoric bombardment 200 million years after the planet’s formation, University of Bristol geologist Matthias Willbold reports. According to standard planetary formation models, the gold, platinum, and tungsten that were present when Earth was born should have quickly bonded to iron and sunk into the planet’s core. Those precious metals are thousands of times more prevalent on the surface of Earth and in its mantle than the models predict. [Source: Elizabeth Svoboda, Discover magazine, January-February 27, 2011]

“Willbold proposes that a colossal meteor shower about 4 billion years ago deposited the additional bling. To test his theory, he measured the isotopic mix of tungsten in rocks from an ancient formation that predates the proposed meteor shower. He then compared the readings with isotopes found in more recent rocks. “If you look at really ancient rocks in Greenland, the tungsten composition is different,” he says. [Ibid]

“Willbold’s group reported in a paper published last September that levels of certain isotopes in the newer rocks are slightly lower than in the old ones, indicating an addition of precious metals similar to what meteoric impacts would have produced. Beyond sprinkling the planet with riches, Willbold believes the meteor shower could have helped deliver the ingredients necessary for life: “Most of the water on Earth today may have been brought during that late bombardment.” [Ibid]

Oldest Known Gold Artifacts, from Bulgaria

The world’s oldest known gold artifacts, a couple of 6000-year-old goat figures with holes punched in them, were not found in Mesopotamia, the Indus Valley or Egypt: they were discovered in 1972 by a tractor operator laying some electric cable in northeastern Bulgaria. The National History Museum in Sofia, Bulgaria contains solid gold Panagjuiste jewelry, ornaments and dinnerware from 4,000 B.C. [Source: Colin Renfrew, National Geographic, July 1980]

The largest golden goat was about two-and-a-inches long. It was discovered along with about 2,000 other gold pieces (weighing more that 12 pounds) in 250 excavated graves in an ancient cemetery near the Black Sea town of Varna. The pieces included golden necklaces, breastplates, chains, bracelets, earrings, a hammer, and a bowl painted in gold. [Ibid]

The find was astonishing. Most cultures still used stone tools in this period, a few had developed copper axes and awls, and the development of bronze was still a thousand years in the future, and iron two thousand years. The gold pieces date back to at least 4000 B.C., and they may go as far back as 4600 B.C. [Ibid]

Early History of Gold

Gold was valued by Egyptian pharaohs and medieval kings. It has driven nations to war, civilization to pinnacles of prosperity and desperate explorers to their demise. By 1500 B.C. gold from Nubia was helping to make Egypt a rich kingdom. King Tutankhamun’s funeral mask, created in 1323 B.C., highlighted the skill of ancient Egyptian gold craftsmen. By 1200 B.C. Egyptians mastered the art of beating and developed the lost-wax gold casting technique, still used today to make jewelry. [Source: Wall Street Journal, The Ages of Gold by Timothy Green]

“In 1091 B.C. postage-stamp-size squares of gold were used as money in China. In 560 B.C. the first gold coins were minted in present-day Turkey by the Lydians, who pioneered a method of refining that ensured consistent purity. When Alexander the Great conquered the Persian empire in 334 B.C. he claimed a treasury of gold now valued at around $1 billion. [Ibid]

“Rome gained access to Spain’s gold mines during the Second Punic War (218-202 B.C.). The Romans go their hands even more gold when Julius Caesar conquered Gaul in 58 B.C., claiming enough gold to repay all of Rome’s debts. In A.D. 50 the Romans issued their first gold coins. They remained in use for almost 400 years. In A.D. 309 Roman Emperor Constantine produced the first the gold solidus, which circulated in various forms for almost 1,000 years. [Ibid]

In ancient times people put sheep in streams to collect gold. The expression the golden fleece is believed to have possible been derived from this practice. The ancient Chinese thought gold conveyed immortality. Few gold objects remain from ancient times because gold objects were often melted down and made into new objects rather than repeatedly being handed down.

World's First Money

The worlds' first money, many scholars say, was circulated in the 7th century B.C. by the Lydians.. The thumb-nail-size coins were struck from lumps of electrum, a pale yellow alloy of gold and silver, that had washed down streams from nearby limestone mountains. The late Oxford scholar Colin Kray surmised that the Lydian government found the coins useful as standard medium of exchange and merchants liked them because they didn't have to do a lot of weighing and measuring. [Source: Peter White, National Geographic, January 1993]

There is some debate as to where the world's first money came from. Some scholars say the world's oldest coins are spade money from Zhou dynasty China dated to 770 B.C. In the seventh century B.C. coins were minted in China with the names of towns printed on them. These coins were tiny, minted pieces of bronze shaped like knives and spades.

The Lydians lived on the west coast of Asia Minor near present-day Izmir, Turkey, They made thumb-nail-size coins under King Gyges in 670 B.C. What made the Lydian coins different from the Chinese coins were inscriptions of the king’s government---widely seen as endorsement of the money by the king. Some coins had portraits of Lydian King Gyges. These have been found as far east as Sicily. Others were struck in denominations as small as .006 of an ounce (1/50th the weight of a penny).

Electrum was panned from local riverbeds. First unearthed at the Temple of Artemis at Ephesus, the coins had many of the same features of modern coins: they were made of a precious metal, the were a specific measured size and they were stamped with images of rulers, animals and mythical beats.

The idea of coinage was so popular that it was adopted by several Greek city-states only a few decades after the first coins appeared in Lydia. The Greeks made coins of various denominations in unalloyed gold and silver and the stamped them with images of gods and goddesses.

Lydian Gold

The Lydians also likely produced the first pure gold and pure silver coins during the kingdom of Croesus (561-547 B.C.) The problem with the electrum coins is that the amount of gold varied and thus the value of the coins varied.. This problem was solved by producing pure or nearly pure gold and silver coins.

The Lydians developed an innovative refining process for retrieving gold from the ore taken from the Pactolus River, which had a high copper and silver content: 1) they pounded the metal to increase its surface area. 2) Base metals like copper were removed through cupellation, melting lead with the metal, subject into bursts of hot air from bellows. The heat separates the gold and silver alloy from the molten mass of lead oxide that absorbed the copper. 3) hammered pieces of gold, with silver in the, were damped and mixed with salt and placed in a small earthenware container. 4) The container is heated at a high temperature for several days. The salt, moisture and earthenware surface react producing a corrosive vapor that penetrates the metal and removed the silver. 5) the pieces of pure gold are removed, melted and forged.

Archeologist found a vase full of gold coins. But otherwise few gold items have been found at Lydian sites. Maybe the stiff was taken by Persians or other conquerors.

Later History of Gold

Pre-Columbian Indians used the lost wax technique to make gold figurines and ornaments. In this process, first a mold was made. Wax was then poured into the mold and after it cooled the casting was taken out. Hollow tubes were inserted into the wax and the castings itself was coated with layers of plaster. When the plaster dried the wax inside the new mold was drained out the hollow tubes. Golden was then poured in to create the object.╠

“An Islamic gold coin was issued in Damascus in A.D. 696. Venice introduced the gold ducat, whose weight and purity remained the same for 500 years. Columbus’s discovery of the New World triggered the Spanish conquest. By 1510 Incan gold from Columbia and Peru was flowing into Spain. In 1700 gold was discovered in Brazil. It became the world’s largest gold producer, tripling the global output by 1720. [Ibid]

“In 1663, Britain minted the Guinea, named after Africa’s Gold Coast. It became the main circulating coin in the British Empire. In 1694, the Bank of England, the first central bank to have gold reserves , was established. As master of the Royal Mint. Sir Isaac Newton, fixed the price of gold at about three and half pounds, effectively placing Britain on the gold standard, where it remained until 1931. [Ibid]

“The California Gold Rush began in 1848 when John Marshall found gold flakes while building a sawmill n Sacramento. Gold production increased tenfold over the next ten years. A similar gold rush in Australia helped gold challenge silver as the main material for making coins. The Alaska Gold Rush began in 1889 when prospectors discovered gold in the Klondike. [Ibid]

Because of its scarcity, durability and ease of exchange, gold has acted as currency for many parts of the world for centuries. Bank notes only came into common use in the 19th century and even then they were often IOUs for gold in the national treasury. Fort Knox was set up to store all the gold necessary to back the paper money circulating around.

According to the Guinness Book of Records, the largest gold nugget ever found was discovered in 1869 in Moliagul, Victoria, Australia. It contained 2,248 troy ounces (230 pounds) of gold and was over 99 percent pure gold. The largest piece of gold was the Holtermann Nugget, found in 1872 in the Beyern and Holternman Star of Hope mine in New South Wales, Australia. It contained 2,640 troy ounces of gold and was in a 7,560 troy ounce slab of slate.

The gold standard ended in 1931 in Britain. The United States remained on the gold standard until 1971 when U.S. President Richard Nixon suspended the convertibility of gold into dollars. Over the years it importance in the international economy has declined.

Gold and Alchemy

The prime objective of alchemy was to produce gold from less expensive materials. Through elaborate mixing and heating procedures alchemists attempted to make gold by changing the proportion of elements in base metals---or 'natural growth--- of these metals---into gold. Alchemy described chemical reactions in terms of "active principles" guided by God and channeled through the alchemist if he was spiritually pure enough. Alchemy was supported by the Catholic Church and many alchemists were clerics. In the process of doing their doing experiments, alchemists made important chemicals such as nitric, hydrochloric and sulfuric acids. [Ibid]

“One of the earliest known alchemist, a Jewish woman giving in Egypt in the 1st century A.D. known as Marie, began experimenting with mercury (a silvery liquid) and sulfur (a yellow-colored material) in an effort to make gold. By A.D. 300 alchemists had turned to more mystical schemes. Zosimos, who got many ideas from his dreams, wrote that "the soul of copper must be purified until it achieves the sheen of gold and until it becomes the royal sun-metal.” [Ibid]

“As early as 1500 B.C. the Mesopotamians learned to purify gold through "cuppelation," in which impure gold was heated in a porcelain cup. The impurities were absorbed into the porcelain and pure gold remained. Medieval alchemist did the same thing with lead ore (which often contains small amounts of gold or silver) and claimed they had created gold when a small amount of it was left behind in the cup. [Ibid]

“Goldsmiths and silversmiths fashion their metals using similar techniques. In medieval times these two craftsmen were the elite of the merchant class, often having large shops and several apprentices. The attraction of gold was not only its luminescence and beauty but also its malleability which allowed it to be fashioned into jewelry and layers ten thousandths of an inch thick which were used to gild statues, paintings and illuminate manuscripts. Gold can be made this thin by striking it with a farmer hundreds of times. ["Life in a Medieval City" by Joseph and Frances Gies, Harper Perennial]

“Sir Isaac Newton spent years working with mercury, silver, lead and sulphur in an effort to produce gold. He thought he had discovered "the screw of alchemy" that "living" mercury "makes gold begin to swell.. and also to spring forth in sprouts and branches." Newton often absorbed himself in alchemy text but he kept this interest secret. In his notes on alchemy he wrote "they call lead a magnet because mercury attracts the seed of Antimony," and how "certain metals or salts are 'drawn' or 'extracted'" and how some substances were "laid down" and others were "held down.” [Ibid]

Image Sources: Wikimedia Commons

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, The Guardian, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, NBC News, Fox News and various books and other publications.

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© 2008 Jeffrey Hays

Last updated August 2012

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