St. Gallen, July 2011. The World Resources Forum Secretariat continues the series “Resource Snapshots” with gold. You can learn in less than 2 minutes the key issues of this precious metal.
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Applications and use
About 78% of gold consumed each year is made into jewelry and thus it is the most common way gold reaches consumers.[fn]Scottsdale Bullion and Coin (2014). Top Six Common Uses of Gold. Online: http://www.sbcgold.com/blog/top-6-common-uses-for-gold/ (last access: 07.11.2014).[/fn]. Due to characteristics such as high ductility, robustness to many chemical reactions and good conductivity of electricity and heat gold is also used in industrial applications such as in the electrical sector, but also in the medical and dental domain. Scientists are working on new applications for gold, including nanotechnologies, water purification and energy efficiency.[fn]World Gold Council (2011): Technology. Online: http://www.gold.org/technology/ (last access: 07.11.2014).[/fn].
Mining
Biggest gold producers are mostly in emerging and some rapidly growing economies such as China, Russia, South Africa, Peru, Mexico, Ghana and Indonesia where serious environmental and socio-economic impacts from the extraction activities are being registered.[fn]Gold InfoMine (2010). Top Gold Producing Countries. Online: http://gold.infomine.com/countries/ (last access: 07.11.2014).[/fn]. The US, Canada and Australia are also relevant producers in the gold industry.
China was in 2012 the leading gold mining country.[fn]Forbes (2014). China Gold Production Rises. http://www.forbes.com/sites/kenrapoza/2013/02/25/china-gold-production-rises/ (last access: 03.12.2014).[/fn]. with a production of 403 tons (about 13 percent of global gold production)3. Mining gold produces an immense quantity of waste; for producing one ounce of gold about 250 tons of rock and ore need to be removed.[fn]Larmer, B (2009): The Real Price of Gold. In: National Geographic, January 2009. Online: http://ngm.nationalgeographic.com/2009/01/gold/larmer-text (last access: 07.11.2014).[/fn].
Reserves
Worldwide reserves of gold are 51,000 tons according to the USGS[fn]U.S. Geological Survey (2011): Mineral Commodity Summaries – Gold. Online: http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2011-gold.pdf (last access: 06.07.2011).[/fn]. Gold scrap is recovered and then remelted, therefore these reserves may last longer than some other finite mineral resources.[fn]Butterman, W.C.; Earle B.A. (2005): Mineral Commodity Profiles – Gold. Online: http://pubs.usgs.gov/of/2002/of02-303/ (last access: 05.07.2011).[/fn].
Recent price developments
The annual average price in 2009 was 973 $ per troy ounce and rose to over 1,400 $ per troy ounce in April 2011[fn]World Bank (2011): Commodity Price Data. Online: http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1111002388669/829392-1304528907776/Pnk_0611.pdf (last access: 05.07.2011). [/fn].On the 8th of August the price for one troy ounce of gold topped 1,700 $[fn]Metalprices (2011): Current Primary and Scrap Metal Prices. Online: http://www.metalprices.com/ (last access: 09.08.2011).[/fn].Gold is seen as a safe commodity in financial and/or political crisis[fn]British Geological Survey (2011): World Mineral Production. Online: http://www.bgs.ac.uk/mineralsuk/statistics/worldArchive.html (last access: 05.08.2011).[/fn], this explains why prices are rising currently since other forms of investment are becoming unpredictable.
Environmental problems
The use of highly toxic cyanide for ore processing is one of the main problems in gold production. In case of an accident the spilled cyanide kills all life in the watercourses it enters over a considerable distance. Cyanide can also reach the ground water and thus threaten human health[fn]Butterman, W.C.; Earle B.A. (2005): Mineral Commodity Profiles – Gold. Online: http://pubs.usgs.gov/of/2002/of02-303/ (last access: 05.07.2011).[/fn]. An other environmental problem is accumulated waste that is pumped into the sea (effluent) or piled in primary forest (rocks)[fn]Larmer, B (2009).: The Real Price of Gold. In: National Geographic, January 2009. Online: http://ngm.nationalgeographic.com/2009/01/gold/larmer-text (last access: 05.07.2011). [/fn].
Social problems
Mine workers work under hazardous circumstances. Lethal accidents happen every now and then due to explosions, often caused by inexperienced workers and/or inadequate security measures[fn]Larmer, B (2009).: The Real Price of Gold. In: National Geographic, January 2009. Online: http://ngm.nationalgeographic.com/2009/01/gold/larmer-text (last access: 05.07.2011).[/fn]. In August 2010 a copper-gold mine in Chile caved in and trapped 33 miners. They were all rescued in October after 69 days in the dark. UNIDO studies show that small-scale mines release a high amount of mercury which affects the workers’ and nearby population’s health[fn]Filho, S.R.P; Correa dos Santos, R.L.; Boese-O’Reilly, S. et al. (2004): Environmental and Health Assessment in two small-scale gold mining areas – Indonesia. Online: http://www.unido.org/fileadmin/import/44437_Environmental_and_health_assessment_Indonesia.pdf (last access: 05.07.2011).[/fn]. Another issue can be the relocating of local communities, such as in Rosia Montana, Rumania.
Alternatives
Many gold alloys which are used in electronics are being analysed so that they can provide the same performance with lower gold content. Possibilities for substituting gold are platinum, palladium and silver[fn]U.S. Geological Survey (2011): Mineral Commodity Summaries – Gold. Online: http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2011-gold.pdf (last access: 05.07.2011).[/fn].
Outlook
Some argue that the gold price will rise due to growing inflation and decreasing GDP[fn]Barisheff, N. (2011): Gold Outlook 2011 – Irreversible Upward Pressures and the China Effect. Online: http://seekingalpha.com/article/245928-gold-outlook-2011-irreversible-upward-pressures-and-the-china-effect (last access: 05.07.2011).[/fn]. Many influences, such as geopolitical developments can influence the price developments.
In the last years a decline in gold production has been reported, according to Barrick this trend will continue. Furthermore it says gold’s scarcity value will increase[fn]Barrick Gold (2009): Here’s Why We Eliminated Our Gold Hedges, Just As The Marked Started To Peak. Online: http://www.businessinsider.com/barric-heres-why-we-eliminated-our-gold-hedges-just-as-the-metal-started-to-peak-2009-12#first-look-at-all-the-liquidity-out-there-1 (last access: 05.08.2011).[/fn]. Recycling will hold its share of supply, but generally expectations are that recycling rates will not significantly increase in the near future [fn]Butterman, W.C.; Earle B.A. (2005): Mineral Commodity Profiles – Gold. Online: http://pubs.usgs.gov/of/2002/of02-303/ (last access: 05.07.2011). [/fn].
WRF Resource Snapshot (4) has been compiled by Riccarda Sutter. She would greatly appreciate corrections, suggestions or other remarks, which could improve this document. Suggestions for which other resources to choose are also welcome. Riccarda can be reached at info@worldresourcesforum.org.
