Price

Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the amount of gold present, with 24 karats being pure gold and lower ratings proportionally less. The purity of a gold bar can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995 being very pure.

The price of gold is determined on the open market, but a procedure known as the Gold Fixing in London, originating in September 1919, provides a daily benchmark figure to the industry. The afternoon fixing appeared in 1968 to fix a price when US markets are open.

The high price of gold is due to its rare amount. Only three parts out of every billion (0.000000003) in the Earth's crust is gold.

Historically gold was used to back currency; in an economic system known as the gold standard, a certain weight of gold was given the name of a unit of currency. For a long period, the United States government set the value of the US dollar so that one troy ounce was equal to $20.67 ($664.56/kg), but in 1934 the dollar was revalued to $35.00 per troy ounce ($1125.27/kg). By 1961 it was becoming hard to maintain this price, and a pool of US and European banks agreed to manipulate the market to prevent further currency devaluation against increased gold demand.

On 17 March 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a store of value although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank in New York, which holds about 3% of the gold ever mined, as does the similarly-laden U.S. Bullion Depository at Fort Knox.

In 2005 the World Gold Council estimated total global gold supply to be 3,859 tonnes and demand to be 3,754 tonnes, giving a surplus of 105 tonnes.

Price records

Since 1968 the price of gold on the open market has ranged widely, from a high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Gold Fixing). The 1980 high was not overtaken until 3 January 2008 when a new record of $865.35 per troy ounce was set in the a.m. London Gold Fixing. On January 10, 2008, gold futures for February delivery was $884 on the New York Mercantile Exchange, erasing by $10 the previous record of $875 in 1980, and later it settled at $880.30. On January 25, 2008, Gold and platinum prices climed historic highs of 919.80 and 1,634.50 dollars per ounce, respectively (London Platinum and Palladium Market).

Gold Hunt

There are more ways than one of hunting gold. Last week the U. S. Government, already holding $4,300,000,000 worth of gold, was trying to get more by ferreting out private gold hoards.* So that private holders could not profitably dispose of their gold elsewhere the Government was still paying only 20.67 (now depreciated) dollars for an ounce of gold. Hence U. S. gold miners have ceased bringing their output to the mints, but the Government still has to release some gold for industrial use (gold teeth, gold leaf, etc.). Net result of the U. S. Government's gold hunt was therefore—as shown in last week's Federal Reserve report—a decrease of $1,000,000 in the U. S. stock of monetary gold.


Another kind of gold hunt goes on in Canada, where, since sterling went off gold, the Government has paid a premium for gold to make up for the depreciation of the Canadian dollar. Canadian producers getting 37.78% more than the pre-Depression price per ounce ir making exciting profits. Mines are stepping up production, prospectors scouring Northern Canada in hope of new discoveries. With the U. S. gold hunt so unprofitable, U. S. businessmen have been rushing to join the Canadian hunt. Last week two U. S. expeditions, each including a famed U. S. ex-athlete, were flying into Canada's gold country: Tunney.

Seven U. S. millionaires composed party number one, headed by Wall Street's bear speculator Bernard E. ("Ben") Smith. They included Bernard F. Gimbel, head of Manhattan's Gimbel's; Donald M. Smith, broker (no relation) ; F. S. Argnimbau; Edward J. Flynn, Democratic boss of The Bronx and backer of Franklin Roosevelt; Eddie Dowling, comedian; James Joseph Tunney, financier-sportsman.

After breakfasting sumptuously at the home (just outside Toronto) of John Paris Bickell, "richest bachelor in Canada," the party set out in two General Airways' planes flying due north over Ontario's lake country to Porcupine gold camp. Their first goal was famed Mclntyre-Porcupine mine, Mr. Bickell's prize performer (which produced $5,425,000 of gold last year). There they met Sandy Mclntyre, onetime glass-molder, later foreman of a railroad construction gang, who discovered the mine and now lives on a pension (doled out in small amounts so that he will not disappear for too long at a time). There they went down into the bowels (4,134 ft.) of the earth to see the quartz gold vein being hacked. From Porcupine they planned to go to Kirkland Lake and Noranda mines and fly back to Toronto and New York prepared to buy Canadian gold shares with new avidity.

Hubbard. While the New Yorkers were hopping to northern Ontario, another plane took off from Boston bound for Labrador bearing Charles J. Hubbard (Harvard football captain, 1923) and three companions. Already Hubbard has a gold claim staked in the interior of Labrador.


*What use more gold would be to the Government economists could not figure out. The Federal Reserve has already $1,565,000,000 more gold than is needed for the 40% reserve against its note issue.

Applications

As the metal

Medium of monetary exchange

In various countries, gold is used as a standard for monetary exchange, in coinage and in jewelry. Pure gold is too soft for ordinary use and is typically hardened by alloying with copper or other base metals. The gold content of gold alloys is measured in carats (k), pure gold being designated as 24k.

Gold coins intended for circulation from 1526 into the 1930s were typically a standard 22k alloy called crown gold, for hardness. Modern collector/investment bullion coins (which do not require good mechanical wear properties) are typically 24k, although the American Gold Eagle and British gold sovereign continue to be made at 22k, on historical tradition. The Canadian Gold Maple Leaf coin contains the highest purity gold of any popular bullion coin, at 99.999% (.99999 fine). Several other 99.99% pure gold coins are currently available, including Australia's Gold Kangaroos (first appearing in 1986 as the Australian Gold Nugget, with the kangaroo theme appearing in 1989), the several coins of the Australian Lunar Calendar series, and the Austrian Philharmonic. In 2006, the U.S. Mint began production of the American Buffalo gold bullion coin also at 99.99% purity.

Today, gold has fallen out of use in coins made for general circulation.

Jewelry

Because of the softness of pure (24k) gold, it is usually alloyed with base metals for use in jewelry, altering its hardness and ductility, melting point, color and other properties. Alloys with lower "k", typically 22k, 18k, 14k or 10k, contain higher percentages of copper, silver or other base metals in the alloy. Copper is the most commonly used base metal, yielding a redder metal. Eighteen carat gold containing 25% copper is found in antique and Russian jewelry and has a distinct, though not dominant, copper cast, creating rose gold. Fourteen carat gold-copper alloy is nearly identical in color to certain bronze alloys, and both may be used to produce police and other badges. Blue gold can be made by alloying with iron and purple gold can be made by alloying with aluminum, although rarely done except in specialized jewelry. Blue gold is more brittle and therefore more difficult to work with when making jewelry. Fourteen and eighteen carat gold alloys with silver alone appear greenish-yellow and are referred to as green gold. White gold alloys can be made with palladium or nickel. White 18 carat gold containing 17.3% nickel, 5.5% zinc and 2.2% copper is silver in appearance. Nickel is toxic, however, and its release from nickel white gold is controlled by legislation in Europe. Alternative white gold alloys are available based on palladium, silver and other white metals (World Gold Council), but the palladium alloys are more expensive than those using nickel. High-carat white gold alloys are far more resistant to corrosion than are either pure silver or sterling silver. The Japanese craft of Mokume-gane exploits the colour contrasts between laminated colored gold alloys to produce decorative wood-grain effects.

Characteristics

Gold is the most malleable and ductile metal; a single gram can be beaten into a sheet of one square meter, or an ounce into 300 square feet. Gold leaf can be beaten thin enough to become translucent. The transmitted light appears greenish blue, because gold strongly reflects yellow and red.

Gold readily forms alloys with many other metals. These alloys can be produced to increase the hardness or to create exotic colors . Native gold contains usually eight to ten percent silver, but often much more — alloys with a silver content over 20% are called electrum. As the amount of silver increases, the color becomes whiter and the specific gravity becomes lower.

Gold is a good conductor of heat and electricity, and is not affected by air and most reagents. Heat, moisture, oxygen, and most corrosive agents have very little chemical effect on gold, making it well-suited for use in coins and jewelry; conversely, halogens will chemically alter gold, and aqua regia dissolves it via formation of the chloraurate ion.

Common oxidation states of gold include +1 (gold(I) or aurous compounds) and +3 (gold(III) or auric compounds). Gold ions in solution are readily reduced and precipitated out as gold metal by adding any other metal as the reducing agent. The added metal is oxidized and dissolves allowing the gold to be displaced from solution and be recovered as a solid precipitate.

Recent research undertaken by Sir Frank Reith of the Australian National University shows that microbes play an important role in forming gold deposits, transporting and precipitating gold to form grains and nuggets that collect in alluvial deposits.

High quality pure metallic gold is tasteless, in keeping with its resistance to corrosion (it is metal ions which confer taste to metals).

In addition, gold is very dense, a cubic meter weighing 19300 kg. By comparison, the density of lead is 11340 kg/m³, and the densest element, Iridium, is 22650 kg/m³.

Colour of gold

The usual gray colour of metals depends on their "electron sea" that is capable to absorb and re-emit photons over a wide range of frequences. Gold behaves differently, depending on subtle relativistic effects that affect the orbitals around gold atoms.