Gold has captured the dreams of people for centuries. It has long been considered as money and is today both an asset and a commodity.


Chemical Properties

In the Periodic Table gold has the symbol Au and its atomic number is 79. The symbol Au comes from the Latin word ‘Aurum’ which means ‘shining dawn’ or ‘glowing dawn’. Gold does not oxidize – it is non reactive. It is a dense yellow color metal and is malleable and ductile. The only acid that will dissolve gold is nitro-hydrochloric acid (aqua regia). It dissolves in mercury where it forms an amalgam, and it also dissolves in cyanide solutions. Nitric acid is used to test gold to ensure it really is gold. Nitric acid will dissolve base metals and silver but not gold. This is called the acid test. Gold is highly conductive and is used in electronics connections.

Gold Facts

  • Approximately 175,000 tonnes of gold exist in the world today. This is all the gold that has been mined throughout history. As gold is treasured so much, it has not been destroyed, is recycled, and all the gold ever mined is still with us, unlike silver which is not worth recycling (at present). All the gold in the world would fill two Olympic sized swimming pools, or comprise a cube approximately 66 feet square.
  • The most prized of metals has been used as coins for money as far back as history goes. When gold is used as money, this is called a Gold Standard. Although no countries are on the gold standard today, history has shown that the removal or dilution of the amount of gold in coinage often results in and from a nation’s downfall, such as Rome.
  • Due to gold’s unique chemical properties it is used in electronics, dentistry, and a multitude of other uses that require a non reactive non corrosive metal.
  • When the Earth was formed and molten, the heavy metals such as gold and platinum followed the force of gravity and went deep down into the Earth. Today this can be seen with the mines in South Africa which are several kilometers deep.
  • Collisions from asteroids also bring gold to Earth. The Witwatersrand Basin in South Africa is a major gold deposit due to the Vredefort Crater impact.


Gold is highly ductile, meaning that it can be pounded or compressed and will not break apart, but will spread under pressure. One troy ounce of gold will make 300 square feet of gold leaf. Gold can be become thin enough to be transparent.


Gold is often described as a color, but it should be considered as yellow. Most metals are silvery or various sheen's of white, so gold does stick out amongst the metals.

Gold Purity

The purity of gold is measured in carats (short form – k). Pure gold is 24 carat. If you have 22 carat gold it is 91.6% pure ((22/24)x100=91.6).

Gold (and other precious metals) are measured in Troy Ounces which dates back to the Roman Troyunits of measurement in use in 1390. One pound of metal was called an Aes Grave and it was divided into twelve equal portions called Uncia’s. A troy ounce weighs 31.1034768 grams and a kilogram contains 32.15 troy ounces. The Grain was another Roman measuring unit that is still in use. Gunpowder measurements for ammunition are measured in grains to this day.

Usage through History

The Egyptians accumulated large quantities of gold which was made into jewellery and items for the Pharaohs and other royalty. Egypt and Nubia contained some of the richest gold deposits ever found. In 610 BC gold was being used in coins in Lydia. Around the years 400–500 BC gold coins were being used in China. The Romans became masters of hydraulic mining in 25 BC and they mined throughout their empire. They had large mining operations in Spain, Transylvania, and Britain. In the early 1400’s the Portuguese took control of the gold route across the desert in Morocco.

Gold became one of the driving forces that contributed to the expansion of European culture in South America. The Spanish came upon the Aztecs and looted their gold. The Aztecs called gold Teocuitatl meaning ‘The Gods Excrement’. Gold rushes in the development of North America and Australia led many to travel great distances to undertake hard work, often with no results or enrichment.


A major method of gold deposition is the movement of mineral rich solutions during metamorphism (heat and pressure) that deposit it in fractures in the veins of rocks. This is how it often occurs within quartz veins. The amateur must take care to know his geology and not put his efforts into pyrite or chalcopyrite (fools gold).

It could also be spread evenly throughout an ore, often not visible to the eye. The Hemlo Gold Deposit in Northern Ontario, Canada had been held my many mining companies for decades as they searched for lead, copper, and zinc. When someone finally got around to testing it for gold, it was found to be an extremely rich and large deposit. The mineral rights had changed hands many times as it was the first time gold had been discovered disseminated through out the ore.

Alluvial deposits are created when water flows over gold veins. The erosion of the underlying surface by water, and debris during floods, nicks tiny specks of gold off the rock and the gold is carried downstream. As gold is malleable, larger chunks will often stay in one piece and take impressions from the surfaces they hit. This is how gold nuggets are formed.

Gold accumulates anywhere its weight allows it to drop out of the water flow. Gold in alluvial deposits can be found in gravel and sand. Panning is a common small scale method of extracting this gold. The use of a sluice (a series of baffles with a ridged bottom that the sediment is run through) greatly increases the amount of material that can be processed, and consequently the yields of gold. As these deposits can take centuries to form, and rivers change their course over time, these deposits can be found where the river used to run, although they would be harder to extract manually.

Gold can also be found crystallized under rare conditions. Gold crystallizes to form an eight sided octahedron, but should not be confused with Pyrite (crystallized fools gold). In Ballarat, Victoria, Australia, a gold crystal of 23 troy ounces was discovered in 1858.

Gold Producing Countries

The 2012 US Geological Survey rates countries by gold production.

  • 1 China – 2700 Metric Tons
  • 2 Australia – 370 Metric Tons
  • 3 United States – 250 Metric Tons
  • 4 Russia – 205 Metric Tons
  • 5 South Africa – 170 Metric Tons
  • 6 Peru – 165 Metric Tons
  • 7 Canada – 102 Metric Tons
  • 8 Indonesia – 95 Metric Tons
  • 9 Uzbekistan – 90 Metric Tons
  • 10 Ghana – 89 Metric Tons
  • 11 Mexico – 87 Metric Tons
  • 12 Papua New Guinea – 60 Metric Tons
  • 13 Brazil – 56 Metric Tons
  • 14 Chile – 45 Metric Tons
  • The rest of the world – 686 Metric Tons

Gold Consuming Countries

India: India is the biggest importer, in 2010 India imported 745.7 Metric Tons of gold.

China: although the amount of gold imported for China is not certain, the numbers they released for 2010 was 428 Metric Tons.

USA: The USA is next, importing 128.6 Metric Tons.

The Gold Standard

Currency made of gold or backed by gold is referred to as a Gold Standard. To be a gold standard a currency backed by gold has to be easily redeemable in gold. Around 560 BC the Lydians (Turkey) had learned how to separate gold from silver. They created the world’s first gold standard in 643 BC when they started making gold coins. The early coins were valued according to their weight. This carried on for many centuries with different countries. There was also a silver standard.


Rome used to make gold and silver coins. Back then a soldier was paid a silver coin about the size of a North American dime for a days work. Most likely a day’s work was a lot longer than a days work today. As the years passed and Rome began its descent the silver coins were being made with less and less silver. Eventually this led to a loss of faith in the Roman Empire, as the purchasing power of the coin in areas faraway from Rome was declining. The fall of Rome was set in motion partly by the dilution of its currency.

It became the norm that throughout history gold and silver was used as money. England’s Pound Sterling note goes back to the days when it was equal to a pound of sterling silver (92.5% silver). The USA had a gold standard since 1879, in fact the US Constitution stated that, “No state shall make anything but gold and silver coin a tender for payment of debt.”

After the stock market crash of 1929 many countries were redeeming their US currency for gold. This strained the financial system and on April 5th, 1933 Franklin D Roosevelt signed Presidential Order 6102 which allowed for the confiscation of gold from private individuals. Individuals were paid $20 an ounce for the gold they turned in. Private ownership of gold was now illegal.

Bretton Woods Agreement

In 1944 the Bretton Woods International Monetary System was established. It created the International Monetary Fund (IMF) and the World Bank as the organizations to control the world’s new financial systems. Countries around the world could sell their gold to the United States for $35 an ounce. The US Dollar was now known as the Worlds Reserve Currency.

In 1971 the US was in the midst of recession and inflation, as a result of the being the worlds reserve currency. President Nixon changed the price of gold to US dollar rate. First he changed it to $38, then $42 an ounce. This precipitated a gold run on Fort Knox and in 1973 President Nixon ended the pegging of the price of gold to the US Dollar.

This was the end of the Gold Standard. The price of gold rose to $120 an ounce shortly after and has continued to rise over the years. In the 1960’s countries around the world discontinued issuing silver coins. The silver standard had also ended.


Gold and silver are seen as both an asset and a commodity, but not as money. Since the global financial crisis of 2008 the printing of money has been ramped up by several countries, particularly by the USA, China, Europe, and Japan.

As an economic indicator the value of gold and silver can be seen as a barometer of the economy. If the metal prices rise, then in reality the dollar is devaluing. However this has not happened. The introduction of paper gold and paper silver in the form of GLD and SLV on the stock market has allowed the bullion banks to practice a form of fractional reserve banking with the stocks being sold as IOU’s. Speculation has it that these funds could be over leveraged perhaps up to 100:1, meaning that for every paper ounce of silver or gold, there might be only one ounce backing them.

Every day millions of ounces of gold and silver trade on the stock exchanges and this can be perceived as price manipulation. As the prices are driven down, investors with weak hands, an investor with weak hands would sell at the thought of losing money as they have a short term view or may be uninformed as to the reality of the economy, will fold and sell their physical metals. These are purchased by those with strong hands, those that understand the economic picture and are taking a long term view.


1. Facts about Gold, a Precious Metal and Element

2. Chemical Reactions of the Element AU

3. The Geology of Gold

4. World Gold Council - Gold as Money

5. The Gold Standard

6. Gold Fix Study Shows Signs of Decade of Bank Manipulation

7. Why Bitcoins Are Just Like Gold

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