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Gold

 

Long considered the most precious of precious metals, gold has played, plays and will continue to play an important role as a store of value.

Gold is believed to have first been used by the Egyptians and Sumerians as far back as 4000 BC. Gold was prominent in Greek, Roman and Oriental cultures as a currency and store of value by circa 1000 B.C. and its role in monetary systems has increased since then. Gold also holds a second role as a commodity; mining companies mine gold while jewelers and other manufacturers buy it.

As a commodity, gold has many practical uses due to its inert nature and malleability. From shielding of solar panes on satellites to scanning-electron microscopy, gold has a wide range of industrial applications in addition to its aesthetic appeal and use in jewelry. Whether gold jewelry is categorized as use as a commodity or as a store of value is debatable, but in effect is probably a bit of both.

Gold has many metrics worldwide:

  • A one troy ounce bar is standard in North America – its mass about 31.1035g.

  • The Indian 10 Tola bar is equivalent to 3.75 troy oz. or 116.64g

  • The Chinese 5 Tael bar is equivalent to 6.017 troy oz. or 187.145g

  • The Thai 10 Bhat bar is equivalent to 4.901 troy oz or 152.44g.

As currency gold has two functions: a medium of exchange and a store of value. Due to gold’s monetary role, today it is in direct competition with fiat currencies as a store of value. In an era of dizzying government debt there is a general consensus among policymakers that paper should prevail in investors’ minds over relics such as gold, especially when printing trillions in fresh currencies year after year.

Over the past half century many governments have divested themselves of gold bullion that was accumulated over even longer periods of time. Ironically, gold that historically added stability to currencies was being actively divested in order to illustrate the instability of gold as a store of value. As bullion reserves are finite in nature this practice cannot go on indefinitely.

The largest demand for gold comes from the jewelry industry. However, gold is also vital to the manufacturing industry, where it is used in a wide range of products such as home appliances, computers, spacecrafts, satellites and medical equipment.

  • Electronics: Gold plays an important role in the components for the millions of computers that are manufactured each year. In spacecrafts, gold prevents onboard computers from short circuiting, plays a vital role in movement and landing and enables sophisticated computer technology to transmit information back to earth. Gold also plays a part in processing broadcast signals into a TV picture and helps ensure clear relay pictures from your VCR to your TV.
     
  • Telecommunications: Gold is a central component in the miniature transmitter inside a telephone and coats contacts for phone jacks and connecting cords in telephone systems around the world.
     
  • Lasers and Optics: Gold is used to coat secondary mirrors in telescopes. Its ability to produce high reflectivity of infrared light has made it possible to produce some of the most precise images of Neptune and Uranus ever captured. Communications satellites orbiting the earth also use gold in many important ways, as do security systems used in both home and office environments.
     
  • Medicine and Health: Gold is used in dentistry, eye surgery and treatments for rheumatoid arthritis. Lightweight lasers using gold plated contacts help military personnel treat wounded soldiers and hospital personnel treat seriously injured patients without moving them, saving both time and lives. Ear thermometers contain a gold coated tube to direct heat to the temperature sensing element.
     
  • Industry and Aviation: Gold is used in aircraft and automobile engines, airbags and aircraft windows. Gold is also used in the protective gear used by firefighters.
     

 

 

   
 
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