- 1. How can I tell if my jewellery is real gold?
- » Gold is traditionally weighed in Troy Ounces (31.1035 grammes). With the density of gold at 19.32 g/cm3, a troy ounce of gold would have a volume of 1.61 cm3. A metric tonne (equals 1,000kg = 32,150.72 troy ounces) of gold would therefore have a volume of 51,762 cm3 (i.e. 1.61 x 32,150.72), which would be equivalent to a cube of side 37.27cm (Approx. 1' 3'').
- 2. How do governments distribute the benefits from mining to local communities?
- » For information go to: Extractive Industries Transparency Initiative.
- 3. How do I know if a gold dealer is reliable?
- » The same counterparty risks apply to the gold dealing community that apply to any other industry. Gold dealers listed on our website have satisfied our due diligence procedure but a listing on our site is not and should not be construed as an endorsement or guarantee on our part.
- 4. How do mining companies go about mining for gold?
- » There are two main forms of mining practiced by large scale mining companies, these being surface and underground mining. A full explanation is provided here: mining methods.
- 5. How does a gold mine work?
- » The gold-containing ore has to be dug from the surface or blasted from the rock face underground. This is then hauled to the surface and milled to release the gold. The gold is then separated from the rock (gangue) by techniques such as flotation, smelted to a gold-rich doré and cast into bars. These are then refined to gold bars by the Miller chlorination process to a purity of 99.5%. If higher purity is needed or platinum group metal contaminants are present, this gold is further refined by the Wohlwill electrlytic process to 99.9% purity. Mine tailings containing low amounts of gold may be treated with cyanide to dissolve the gold and this is then extracted by the carbon in pulp technique before smelting and refining.
- 6.How much gold has been mined?
- » The best estimates available suggest that the total volume of gold ever mined up to the end of 2006 was approximately 158,000 tonnes, of which around 65% has been mined since 1950.
- 7. How much gold is still underground?
- » The major gold producers increased their reported reserves to 719.7 million oz or over 22,000 tonnes at the end of 2005, according to Metals Economics Group. Assuming a 10% recovery loss when the ore is extracted, this would amount to 14 years of gold production at 2005's level. In practice the amount of known resources remains fairly constant over time since the results of new exploration finds replace those resources that are exploited.
- 8. How much gold is there in the world?
- » At the end of 2001, it is estimated that all the gold ever mined amounts to about 145,000 tonnes.
- 9. How much is a gram of gold worth?
- » The gold price is usually quoted in US dollars per troy ounce. To calculate the cost of one gram of gold, divide the US dollar price for one troy ounce by 31.1035 (one fine troy ounce is equal to 31.1035 grams).
- 10. I thought gold was only used for making jewellery and in gold bars and coins?
- » Not at all. Over 400 tonnes of gold is used in a diverse range of industrial applications each year, accounting for over 10% of annual gold demand. A number of different industries manufacture an array of gold-based materials, components and chemicals that help produce, or are part of, thousands of products. These products significantly improve our everyday life and safety, and the competitiveness of scores of industries.
- 11. I'm aware that platinum compounds are used as cancer treatments. Is gold or its compounds used in any medical treatments?
» The claims for the medical benefits of gold date back many of thousands of years. Many Eastern cultures have traditionally used gold-based medicinal preparations in the treatment of ailments such as smallpox, skin ulcers and measles. Gold has been used for many years to successfully treat rheumatoid arthritis.
» The gold compound is administered by injection or tablet and works to not only decrease the pain and swelling of arthritis, but may also prevent joint damage and disability. As well as these established applications, trials are currently underway to develop the use of gold in the treatment of certain types of cancer, HIV and malaria.
» Formed pieces of gold metal are used as medical implants for patients whose eyelid muscles have degenerated and in patients suffering from problems with the inner ear, where its resistance to bacterial infection is so important.
- 12. If all the gold was laid around the world, how far would it stretch?
- » If we make all the gold ever produced into a thin wire of 5 microns (millionths of a metre) diameter - the finest one can draw a gold wire, then all the gold would stretch around the circumference of the world an astounding 7.2 million times approximately!
- » If you inflation-adjust the previous gold price record of $850/oz set in January 1980 you get a value of around $2,200/oz, does that mean that gold is no longer an inflation hedge?
- » Inflation-adjusting the $850/oz peak set in January 1980 would indeed give a figure of c. $2,200/oz. However, the gold price only fixed there for one day. Three weeks earlier it was trading at $473/oz, a price it had risen to gradually over the previous three years, and a week later it was trading at $673/oz. Inflation-adjusting from $850/oz is an extremely biased starting point. It would be more objective to “smooth” this temporary spike. A trend line drawn through the daily gold price between 1979-1981, for instance, gives a much more impartial starting point of c. $470/oz for January 1980. In today’s money that would put gold at c.$1,200, close to the recent record of $1,011/oz set on March 17 2008.
- 13. Is a return to a type of gold standard possible in the foreseeable future?
- » The gold standard was appropriate to the second half of the 19th century but circumstances are now different. But this does not mean that gold no longer has a monetary role. It remains an important reserve asset for central banks since it is the only reserve asset that is no-one’s liability. It is thus a defence against unknown contingencies. It is a long-term inflation hedge and also a proven dollar hedge while it has good diversification properties for a central bank’s reserve asset portfolio.
- 14. Is all gold mining legal?
- » Large-scale mining operations require mining licences and a raft of permits and government approvals thorough the various stages of their operations. Thus the process of construction, commissioning and bringing into production of a large scale operation is generally highly regulated and can take several years. There is, however, growing concern that not all gold mining is being done within countries legal frameworks and these concerns are often centred around the artisanal and small scale mining sector.
- 15. Is gold a commodity?
- » Gold is used for different purposes, and these certainly include commodity uses. Industrial applications of gold account for about 10% of demand each year. Demand for gold as jewellery absorbs around 75% of the gold supplied to the market each year, with the balance made up by investment. Gold is certainly included in the leading tradable commodity indices. So for many practical purposes, gold is viewed as a commodity.
- Is gold a global currency?
- » Gold has retained its role as a monetary asset. Central banks around the world still hold around 12 per cent of their reserves in gold, and even private individuals can and do use gold to settle payments. However, gold is not “issued” by any particular government and is not beholden to any political regime. In this sense, it is a truly global, international currency, free of political or national association and liability.
- 16. Is gold a high risk or low risk investment?
- » In general, gold is considered a low risk investment because its price is typically not very volatile. The gold price tends not to fluctuate more than the world’s largest blue-chip stock market indices like the S&P 500. That is why many investors with low-risk profiles are attracted to gold. However, investors in high risk assets also find gold useful because they can use it to manage their risk.
- 17.Is gold mining getting safer with time?
» Safety and health are key priorities for gold mining companies. There have been a great number of initiatives aimed at improving safety – too many too mention here. These initiatives have focused on 2 primary areas: those of technical / managerial systems, and those aimed at changing unsafe behaviours. Below are a few examples: Technical / Managerial Systems Innovation Some ultra deep level mines in South Africa are at close to 4000m and are seismically active (i.e. they are susceptible to underground earthquakes). Accordingly extensive seismic monitoring networks have been introduced encompassing some of the most sophisticated technical systems to monitor rock mass behaviour, and to provide data for a seismicity management system. Such Fall of Ground Management system’s have a number of elements: Firstly, data from the seismic monitoring system is compared with mining plans, and these plans can be modified to reduce the magnitude and frequency of seismic activity. This can be called prevention. Secondly, the protection element of the system. For example, Adaptions can be made to the rock support density and type, to protect workers from the damaging effects of seismic activity, or attempt to induce activity when working places are not occupied such as during blasting time (i.e. bring on a mini quake when it is safe to do so). Lastly, some mines train workers to identify hazards, and the importance of adhering to safe working procedures is supported by a “traffic light” system, where working places are classified on a daily basis as to the risk of seismic activity.
» Another innovation employed at some open-pit operations is automated dispatching systems used to manage the heavy equipment fleet. These satellite linked management systems are implemented to optimize mining productivity, but as productive working methods are conducive to safe working methods, there are major safety benefits. For example heavy equipment movement is automatically scheduled so that vehicle proximity can be maximized. Rest breaks can be scheduled at no productivity loss to reduce the incidence of one of the major hazards in open-pit mining – that of operator fatigue.
- 18. Is gold only used as a financial asset in sophisticated financial markets?
- » For men and women throughout the developing world, gold is still one of the most liquid and widely accepted forms of exchange, quite simply the most efficient store of value they possess. Gold offers protection against a weak currency or high domestic inflation levels, which are prevalent and persistent problems in the developing world. For further information go to Society/Developing Countries.
- 19. Is gold really a good hedge against inflation?
- » There is substantial evidence to support the view that gold is a good long run hedge against inflation. In the short-run, the gold price may deviate from its long run inflation hedge value, and may take a number of years to revert to this constant. Gold is not a perfect hedge against inflation, but it is the only hedge that has been tried and tested over centuries that have seen currencies rise and fall.
- 20. Is gold still used in dentistry?
- » Yes, around 70 tonnes of gold is used every year in dental restorations like bridges and crowns. Gold is the oldest dental restorative material, having been used for dental repairs for more than 4000 years and is considered by many experts to be the best available material. Gold-alloys used in dental work are proven to be durable and long-lasting. Most importantly gold has excellent biocompatibility (it is non-toxic), so allergic reactions to a gold-based dental implant are extremely rare. It is interesting to note that in many countries if practising dentists are asked what type of material for a restoration they prefer for themselves, with few exceptions the answer is a gold alloy
- 21. Is gold used like platinum in automotive catalytic convertors, for controlling exhaust emissions or in fuel cells?
- » Current catalysts are not very efficient until they have warmed up. In addition, a number of companies have patented technologies based on the use of gold for cleaning impuririty gases from hydrogen used to power fuel cells. Impurities like carbon monoxide reduce the efficiency of the fuel cell and it maybe that the use of gold in this application helps fuel cells to become more efficient and commercially viable.
- 22. Is it appropriate for pension funds to invest in gold?
- » Gold certainly merits the attention of pension funds who are seeking good portfolio diversifiers and wish to reduce the volatility of their returns, particularly in response to changes in International Accounting Standards and as part of a liability-matching strategy. Gold is attracting growing interest from a small number of pension funds, some of whom may already be building their exposure to gold, usually as part of a basket of commodities.
- 23. What are GAPs and where can I buy them?
- » GAPs stands for Gold Accumulation Plans which are available to Japanese investors wishing to save gold systematically over time.
- » What are some of the by-products of gold mining?
- » Depending on where gold is being mined there will be different by-products owing to the different mineral compositions of the ore body. These by-products often include copper, silver, and zinc and in certain parts of the world, like South Africa, uranium. Mercury is also present on occasion and in the processing of gold sulphuric acid is generated as a by-product at some operations.
- 24. What are the major gold exchanges and how long have they been around?
- » The Chinese Gold and Silver Exchange Society in Hong Kong registered under this name with the government in 1918, although trading had been taking place with a degree of rules and regulations since 1910 (as the "Gold and silver exchange co").
1. The COMEX division of NYMEX began trading on 31st December 1974.
2. TOCOM began trading on 23rd March 1982.
3. CBOT began trading on 20th February 1979.
4. The Istanbul Gold Exchange began trading on 26th July 1995.
5. MCX began trading on 10th November 2003.
6. NCDEX began trading on 15th December 2003.
7. The Shanghai Gold Exchange began trading on 20th October 2002.
8. TurkDEX began trading on 4th February 2005.
9. DGCX began trading in June 2005.
- 25. What happens to the gold once it has been mined?
- » The ore is normally sent to a refinery, which will extract and melt down the gold into a pure 24ct form, normally as bars or ingots.
- What is a Carat?
- » A Carat (Karat in USA & Germany) was originally a unit of mass (weight) based on the Carob seed or bean used by ancient merchants in the Middle East. The Carob seed is from the Carob or locust bean tree. The carat is still used as such for the weight of gem stones (1 carat is about 200 mg). For gold, it has come to be used for measuring the purity of gold where pure gold is defined as 24 carats. How and when this change occurred is not clear. It does involve the Romans who also used the name Siliqua Graeca (Keration in Greek, Qirat in Arabic, now Carat in modern times) for the bean of the Carob tree. The Romans also used the name Siliqua for a small silver coin which was one-twentyfourth of the golden solidus of Constantine. This latter had a mass of about 4.54 grammes, so the Siliqua was approximately equivalent in value to the mass of 1 Keration or Siliqua Graeca of gold, i.e the value of 1/24th of a Solidus is about 1 Keration of gold, i.e 1 carat.
- 26. Where can I buy gold?
- » Where you can buy gold depends on the form of gold you wish to buy and where you are physically located. Our How to Buy area outlines the various forms gold investment might take, while in Where to Buy, you can see the available forms by country, along with outlets.
- 27. How does mining impact the government revenue of countries where gold is mined?
- » Governments in developing countries tend to have narrow tax bases. Reducing budget deficits - often mandated under IMF (International Monetary Fund) sponsored relief programmes - while at the same time maintaining or increasing spending on health, education, infrastructure and poverty-reducing measures is often a key priority. Broadening the domestic tax base by bringing other activities within the scope of taxation, while desirable, is often administratively impracticable. Additional revenue from mining royalties and taxes can therefore be particularly beneficial. Occasionally governments take a direct stake in mining developments. This is the case for Mali, for example, where the government has 20% ownership of gold mines.
- 28. How does the gold mining industry ensure that local communities are protected?
- » International Finance Corporation's Environmental and Social Standards.
- 29. How much does a gold bar weigh?
- » Gold is made into a large number of different bars of different weights. The most well known are the large 'London Good Delivery Bars' which are traded internationally. These weigh about 400 Troy Ounces, i.e. 12.5 kg/ 27 lbs. Each. Others are denominated in kilogrammes, grammes, troy ounces, etc. In grammes, bars range from 1 g up to 10 kg. In troy oz, from 1/10 tr.oz. up to 400 tr.oz.. Other bars include tola bars and Tael bars
- 30.How much does it cost to run a gold mine?
- » Gold mining is very capital intensive, particularly in the deep mines of South Africa where mining is carried out at depths of 3000 meters and proposals to mine even deeper at 4,500 meters are being pursued. Typical mining costs are US $238/troy ounce gold average but these can vary widely depending on mining type and ore quality. Richer ores mined at the surface (open cast mining) is considerably cheaper to mine than underground mining at depth. Such mining requires expensive sinking of shafts deep into the ground.