Uses of Gold
The Gold Standard
The soft lustrous metal known as gold (symbol Au) is
the most malleable and ductile element. Throughout
the ages, gold's natural properties have allowed it
to be used as a monetary standard, as well as for
decoration, industrial and medical/dental
The way gold is distributed throughout the world
suggests that the metal was carried toward the
earth's surface from great depths, often along with
other metals, within molten rock. Once it cooled, the
gold content in the molten rock was spread through such
great volume of rock that much of the world's gold
is found in small, often microscopic particles.
More than half of the world's total gold production
is done through vein mining (also called "lode"
mining). The gold may be of microscopic particle
size, in nuggets or sheets, or in combination with
other elements. In the latter case, the gold must be
liberated by extraction and refining.
Once mined, gold ore must be crushed and reduced to
a powdery substance from which it may be extracted
by gravity separation and then by cyanidation. The
addition of metallic zinc to the cyanide solutions
causes metallic gold to precipitate. This
precipitate is refined by smelting, and the
purification is completed by electrolysis (the
passing of an electrical current through the
In addition to vein mining, gold is also recovered
as a byproduct of copper, lead and zinc production
and by what's known as placer mining.
In placer mining, freely occurring gold is found in
deposits of sand and gravel from which it can be
easily separated by simple physical means. The sand
and gravel are suspended in moving water; the much
heavier metal sinks to the bottom and is separated
by hand. Panning, use of a sluice box (see photo at
left, early 1850s), hydraulic mining, and dredging
are all placer recovery methods.
For detailed information on gold, visit
Institute or the
World Gold Council.
Uses of Gold
Its high electrical conductivity and resistance to
corrosion make gold important in the manufacture of
components used in a wide variety of electronic
products and equipment. These include computers,
telephones and telephone jacks, power wheelchairs,
airbags, aircraft engines, telescopes, televisions
Because gold is chemically stable, it is employed in
the manufacture of bearings used in corrosive
atmospheres. It's also plated on surfaces exposed to
corrosive fluids or vapors. Gold's reflectivity
allows it to serve as a shield to protect spacecraft
and satellites from solar radiation.
Dentistry and Medicine
Gold's lack of toxicity and its compatibility with
living systems make it indispensable in both
dentistry and medicine.
Dentists use gold in the form of alloys to make
crowns, bridges, inlays, dentures and even braces.
Because gold is biologically inactive, it has become
a vital tool in medical research. For example, tiny
gold particles have been coupled with DNA in
laboratory experiments. The results have produced
new microscopic structures that open a range of
research, treatment and diagnostic possibilities in
fields such as biochemistry, genetics and medicine.
Other medical uses of gold include the direct
treatment of rheumatoid arthritis and other
diseases, and the manufacture of ion lasers whose
interior surfaces are coated with gold to control
the beam's focus.
Jewellery and Decorative Arts
Gold was being made into decorative ornaments as
early as 3000 BC, and throughout the ages, it has
been prized for its great beauty. Gold is the most
malleable element, and is thus easily worked into
jewelry and decoration by hammering and other goldsmithing techniques.
Each day at 10:30 a.m. and 3:00 p.m. in the London
offices of N.M. Rothschild & Sons Ltd., five
representatives from bullion houses talk on their
phones for about ten minutes and then lower tiny
flags on their desks. The lowering of the flags
means they have reached agreement and in this way
the London gold fixing is set, giving the market a
snapshot of the spot price of gold at a particular
time. Since 1919, this exact ceremony has been
performed in the same place and with virtually the
same firms participating.
Here's how it works: At each meeting representatives
of five international banking houses meet face to
face at Rothschild to trade for gold bars that must
weigh about 400 ounces and conform to specifications
set down by the London Bullion Market.
The meeting's chairman suggests an opening price
that the representatives report by phone to their
dealing rooms. The chairman then asks who wants to
buy and who wants to sell and how many 400-ounce
bars they want to trade. If the quantities don't
balance at the opening price, the chairman suggests
a higher or lower one until a balance is reached.
Then he announces the price to be fixed.
At any point during the proceedings, the dealing
rooms can alter instructions to their
representatives, who then signal this change by
raising their flags. The chairman can't declare the
price fixed unless all the flags are down. At this
point the agreed price represents the price at which
all supplies can be absorbed. Since 1968, the gold
price has been quoted in U.S. dollars. While several
local markets also have their own fixing, the London
gold market enjoys the position of being the
Click here for current gold price.
The Gold Standard
The gold standard was an international monetary
system in which the value of a currency was defined
in terms of a fixed quantity of gold. Paper currency
was directly convertible into gold and, because a
government could only print money based on how much
gold it held, the system was supposed to discipline
Great Britain was the first to adopt the gold
standard in 1821. However, the rest of Europe
remained on a silver standard until the 1870s when
the great flow of gold from the United States and
Australia made it possible to circulate sufficient
This system dominated internationally between 1870
and 1914. By the end of World War I, however, the
United States was the only western country in which
paper money was still convertible into gold coins.
By the 1920s, countries were allowed to keep part of
their reserves in key world currencies that could
still be exchanged for gold. Howevert, this attempt
to reintroduce the gold standard failed when
the U.S. prevented private holding and export of
gold in March 1933.
The gold standard forces an inflexibility in
exchange rates, because increases in the money
supply are directly tied to the amount of gold held
in national coffers. By the late 1950s, U.S. dollars
had almost entirely replaced gold in international
transactions. While most countries continued to use
it as a reserve asset, the importance of gold
decreased until, by the 1970s, it was only one of
several means of payment. The dollar-gold exchange
standard at the Federal Reserve in the U.S. lasted