What Are the Main Uses of Gold?

For over 5000 years, and well into the 20^th century, jewellery and gold coins were the only important uses of gold. Today, approximately 75% of the total demand for gold is used in jewellery, 10% is used for other industrial and miscellaneous uses, and the remaining 10% goes to private investors and monetary reserves.

Gold in the Jewellery Industry

Gold has been used in jewellery for as long as gold has been known by mankind. Today, the jewellery industry is by far the main use of all gold produced and accounts for approximately 85% by weight of all the gold dedicated to industrial purposes.

In 1990, the use of gold for jewellery was estimated to be about 2,000 tonnes worldwide, approximately 75% of the total demand for gold.

This has increased steadily: according to a study by the US Geological Survey, an estimated of 2,790 tonnes of gold were consumed in the form of jewellery just in the United States in 2015.

Pure gold is very soft, hence it is commonly blended with other metals to make jewellery. 24-carat gold is pure gold, but in jewellery an 18-carat ring for example is 18 parts gold 6 parts another metal.

Gold as a Monetary Metal and Investment

Gold has been used as the preferred currency method across civilizations around the world over millennia. Only over the past century there has been a shift away from gold as a currency, since it is inherently a non-renewable resource. This means that there is only so much gold it can be mined.

Although since 1971 gold no longer plays a central role in the monetary system, it has retained its traditional role as a store of value.

Gold has an important role in the modern world economy and is often used as a means of diversification in financial portfolios, for both short- and long-term investors. It is perceived by investors as a safe haven, hedge against economic crisis, and store of wealth.

Gold is today traded throughout the world based on the intra-day “spot price” (fixed settlement price) through gold-trading markets. The price of gold is driven by supply and demand. However, different factors influence the price of gold, including monetary policy controlled by the Federal Reserve, inflation, market uncertainty, etc. 

One of the advantages of investing in gold is that its price is less volatile when compared with other assets. In fact, it has the record for staying high for long periods of time, even when the markets are low. Additionally, gold is globally accepted, which means it can be traded regardless of locations.

The demand of gold in 2017 for investment purposes worldwide was 1,231.9 metric tons of gold, mainly in the form of bars and coins (1,029.2 tons), most of which was purchased in China (306.4 tons) and India (164.2 tons). This demand has increased considerably in 2018 – click here to read more about it.

Buying gold as an investment is easier than ever with the raise of the Internet. In Australia, the most popular place is the Perth Mint.

Gold Reserves

During the second half of the 19^th century and until 1971, most of the world adopted gold as the standard sign of wealth in the form of monetary reference metal. Consequently, the U.S. dollar was defined in terms of a specified amount of one of the reference metals such as gold.

As gold was adopted as standard monetary reference metal worldwide, most countries began stockpiling gold in the 19^th century. After 1934, the U.S. began buying all the gold offered to it at $35 per ounce, and the U.S. stock reached almost 22,000 t of gold by 1949.

In 1971, the convertibility of gold into dollars was suspended, and the U.S. stock declined to about 9000 t of gold. World monetary stocks changed little thereafter, and by 1999, there were 33,000 t in the world monetary stock, accounting for 24% of all gold ever mined.

In 2010, most central banks around the world turned from being net sellers of gold to net buyers, as gold regained strength as a safe-haven asset. The United States holds the number 1 position with over 8,000 metric tons of gold, most of which (approximately 4,600 tons) is held at Fort Knox in Kentucky.

Here are some interesting facts about Fort Knox:

• In February 2019, a total 147.3 million ounces of gold are being secured at Fort Knox. This is a long way from the 649.6 million ounces held in December 31, 1941
• The only gold removed has been very small quantities used to test the purity of gold during regularly scheduled audits. Except for these samples, no gold has been transferred to or from the Depository for many years.
• Size of a standard gold bar: 7 inches x 3 and 5/8 inches x 1 and 3/4 inches.
• Weight of a standard gold bar: approximately 400 ounces or 27.5 pounds.

The world’s largest stockpile of gold bullion (6,700 tons), however, is located five stories below ground inside the Federal Reserve Bank of New York, although belongs largely to foreign governments.

Top 10 Countries with the Largest Gold Reserves in 2018

1. United States (8,133.5 tonnes)
2. Germany (3,371.0 tonnes)
3. Italy (2,451.8 tonnes)
4. France (2,436.0 tonnes)
5. Russia (1,909.8 tonnes)
6. China (1,842.6 tonnes)
7. Switzerland (1,040.0 tonnes)
8. Japan (765.2 tonnes)
9. Netherlands (612.5 tonnes)
10. India (560.3 tonnes)

Gold Uses in Electrical and Electronic Circuitry:

The manufacturing of electronics is one of the most important uses of gold in modern society. The demand for gold in the electronics sector in 2017 was 265.3 metric tons of gold!

Gold is soft, ductile, and an excellent conductor of heat and electricity. As such, gold is used in processors and connectors in computers, tablets, laptops, smartphones, televisions, gaming devices, printers, calculators, smoke detectors, GPS devices, electronics in vehicles, etc.

Although gold is slightly less conductive than other metals such as copper, gold has the advantage that it does not oxidize. Hence, gold does not form rust which would decrease the ability to conduct electricity. Additionally, gold withstands electrical connections at elevate temperatures.

Gold Plating involves adding a thin layer of gold over another metal such as copper, nickel or silver through electroplating, which uses electric current to form a coherent metal coating. The advantages of gold coating electrical components are many:

• Gold does not rust, hence it protects the components from corrosion. This is critical in circuitry because oxidation would cause a less reliable electrical connection.
  
  
• As gold is highly ductile and malleable, it expands the connection area, ensuring a more reliable connectivity.
  
  
• Gold has a very high melting point (1943 °F, or 1062 °C), and for this reason it conducts heat (and electricity) very well. Thus, it works well even under intense temperatures such as those experienced in modern microprocessors.
  
  
• Gold plating helps materials last longer because it has a very high resistance to wear.

It is worth noting that over 1 billion mobile phones are being manufactured every year. Each one contains about 50 cents worth of gold (about $500M worth of gold per year). Similarly, it is estimated that 1 ounce of gold is needed to create 40 laptops. Sadly, this means that a lot of gold is lost from society, as very few of them are being recycled.

Gold Uses in Dentistry and Orthodontics:

Gold may have been used in dentistry over the last 3000 years. Although gold was probably used for filling dental cavities in early civilizations, the first documented case of a cavity packed with gold leaf dates to the 9^th century A.D.

The main reasons why gold is the preferred material in dentistry and orthodontics are:

• Gold is chemically inactive, hence it does not corrode or react with other elements
• It is biocompatible, meaning that the human body does not reject it
• It is capable of withstanding heavy forces during chewing
• Gold does not chip or break, hence it is a long-lasting solution
• Gold is a soft metal, similar in hardness to the natural tooth’s enamel, hence it minimises the wear on the opposing tooth

Gold is used in orthodontics as well as conservative and restorative dentistry either as a pure metal or alloyed with noble and/or base metals. Pure gold is used to fill small occlusal cavities because it can be easily cold worked. Additionally, pure gold is used to electroform porcelain veneered copings for crowns and bridgework.

There several gold alloys used in dentistry, ranging from 0.1 to 99.99% content gold, however the most common have a total gold content ranging between 65% and 75%, alloyed with different combinations of platinum group metals, silver, copper, zinc, indium, and tin. The most widely used is the Type 4 alloy, suitable for extra high-strength crown and bridgework.

There is an increasing competition from alternative materials to replace gold in dentistry uses, such as titanium and cobalt/nickel base alloys and all-ceramic crowns. Although the all-ceramic crowns have excellent aesthetic properties, they do not have the long-term clinical approval that gold has.

Consequently, gold alloys remain as the optimum material for dental restoration due to its longevity, functionality, ease of manufacture, biocompatibility, and aesthetic aspects. However, the world demand of gold for dentistry purposes is small, approximately 16.8 metric tons of gold in 2017 (less than 1% of the total world demand).

Medical Uses of Gold:

Gold has been used for its medical properties throughout history. The earliest medical use of gold has been attributed to the Chinese in 2500 BC. The use of gold in modern medicine began in 1890 with the discovery that gold compounds had beneficial effects against tuberculosis. 

As gold is chemically inert, biocompatible, and highly resistant to bacteria and deterioration, the medical industry has expanded the uses of gold in the last few years. Chrysotherapy, the treatment with gold-based drugs, is now an established part of modern medicine.

• Cancer Detection:
  
  As gold is biocompatible and chemically inert, gold nanoparticles can be injected intravenously. Nanoparticles naturally accumulate in areas of leaking vascularity, such as tumours. As such, US researchers are testing new ways of delivering anticancer drugs with minimal side-effects.
  
  An encouraging new approach to treat prostate cancer uses injections of microscopic gold pellets, which can be detected with X-Rays to target the prostate position with an accuracy of 1-2mm.
  
  
• Detection of HIV/AIDS:
  
  Nanotechnology is also being tested in the treatment and prevention of HIV/AIDS. Gold nanoparticles are capable of detecting harmful molecules at ultra-low concentrations, enabling rapid detection of the virus.
  
  Although there is currently no cure for the disease, an experimental drug (auranofin) has been used in monkeys with significant success.
  
  
  
• Rheumatoid Arthritis Treatment:
  
  Gold therapy has been used to treat rheumatoid arthritis for over 20 years, although its use is in decline. The most common and effective treatment is via injection, which has a clinically and statistically significant benefit in the short term.
  
  However, new advances in medications are more effective than gold treatment in slowing down the course of the disease.
  
  
  
• Medical Implants:
  
  Gold-plated pacemakers are used in cases where the patients suffer from one or multiple allergies to metals like quicksilver or titanium. Medtronic INC is the only manufacturer of 24-carat gold-plated pacemakers in the world.
  
  
• Rapid Diagnostic Tests (RDT):
  
  RDTs are medical diagnostic test that are quick and easy to perform. Gold nanoparticles used in RDT enables to detect illnesses rapidly and accurately. This is routinely used to early detect malaria, which affects millions of people every year in third world countries.
  
  Malaria RDTs detect specific proteins produced by malaria parasites, and gold particles help produce a colour change that indicates the presence of malaria, in just under 15 minutes. The sales of malaria RDTs worldwide increases steadily: from 155 million sales in 2011, to 314 million sales in 2014.

Uses of Gold in the Aerospace Industry

Gold is used in the aerospace industry it reflects more UV radiation than any other metal and reflects infrared radiation which helps to keep electronics cool. Hence, it is commonly used in spacecrafts, satellites, and astronaut’s equipment.

Some specific applications include:

• A thin layer of gold coating satellites and spacecraft protects the surfaces from the damaging effects of solar radiation.
  
  
• As gold reflects heat, it stabilises the temperature of spacecrafts, prolonging the longevity of the equipment and making it more habitable.
  
  
• Similarly, it is used on astronauts’ helmets to keep harming radiation away from the eyes and face.

Another important application of gold in the aerospace industry is as a structural coating and solid lubricant. Unlike gold, common oils and grease break down and/or freeze in space. Hence, gold dust is used because it easily slips against itself under zero gravity conditions.

Gold Uses in the Arts and Architecture

Gold has been used to create works of art since the early beginnings of human society. The Egyptians used gold to symbolize their wealth, and it was a crucial part of funerary practices. The Egyptians began developing the art of beating gold into thin sheets about 3000 B.C., and used the sheets to cover funerary masks and tombs.

The art of beating gold into thin sheets was improved over the centuries, and by the 17^th century, goldbeaters of Paris were able to beat a troy ounce of gold into a gold sheet thin enough to cover 10 square meters (i.e., 2 m wide by 5 m long). Today, using modern methods, a troy ounce of gold can be beaten into a sheet that covers an area of 18 square meters or more!

Liquid gold leaf is used to add elegant touches of gold paint in works of art. It is available in a wide variety of carats and shades, but the most common is 22k yellow gold (approximately 91.7% pure gold).

Traditionally, gold leaf has been most commonly used as gilding material. Artworks commonly using gilding include statues, Christian icons, picture frames, paper art, and small objects such as jewelry.

Gold leaf has also formed an important part in the architecture of churches, basilicas, and cathedrals, mainly in the form of murals and mosaics. Similar techniques were used in castles and palaces, such as the Palace of Versailles in France.

Similarly, modern architecture makes use of traditional gilding. A good example is the Criterion Restaurant in the heart of London, with a ceiling of gold mosaic.

Other Uses of Gold

Gold has been used in many different applications, including:

• Gold edges on the pages of some books, particularly older ones and collector editions
  
  
• Coloured glass – gold oxide added to the glass gives it a ruby or cranberry color. This was discovered by medieval artisans when mixing gold chloride with molten glass.
  
  
• High-quality CDs and DVDs use gold to add resistance to scratching
  
  
• Embroidery clothing: as gold is so ductile, it can be drawn into fine threads. Some decorative cloths and clothing thus contain real gold
  
  
• Gold dishes, cups, and cutlery: many fine china patterns on plates and cutlery contain gold. Additionally, gold rims on cups and plates are often 24 carat pure gold
  
  
• New research in the improvements of solar panels take advantage of the extreme malleability and electrical conductivity of gold to create nano-wires that conduct the charge generated by solar cells while minimizing light-blocking wiring. The results improve the efficiency of solar panels by 20-22%
  
  
• Edible gold leaf is so incredibly thin (around one micron) that is relatively inexpensive. It is being used for decorative purposes in desserts and confectionery to promote the perception of luxury and value.  As pure gold is biologically inert, it can be eaten without harm
  
  
• Liquors with floating pieces of gold leaf have been known since the 16^th century. The best-known examples today include Danziger Goldwasser (Poland), Goldstrike (Amsterdam), Goldwasser (Germany), and Goldschläger (Switzerland)
  
  
• Gold’s highly reflective properties are used in city buildings, such as the Royal Bank Plaza in Toronto: its 14,000 windows are coated with a thin layer of gold (for a total of 2,500 ounces) to reflect light and reduce energy bills.

Gold Uses in the Future

It is difficult to predict what is going to happen in the future, but in my opinion, gold consumption in jewellery is likely to remain relatively constant while demand from investors is feasible to increase alongside with an increase in the price of gold.

It is also likely we will see an increase in the demand for gold in industrial purposes such as electronics as a higher percentage of the world population have access to tablets, laptops, etc.

Interestingly, gold bullion vending machines (“Gold To Go”) are already operating in seven countries, including the United States. A computer inside the vending machine tracks gold prices in real time and prices gold bars, coins and jewellery accordingly.