Gold
Gold is a rare and valuable metal that has been admired and sought after for centuries for its beauty and value. In this article, we will explore gold, its origin, properties, mining, wide-ranging applications in various human activities, as well as investing in physical gold or mining companies.
What Is Gold
Gold is a chemical element with an atomic number of 79 and a chemical symbol Au (from the Latin aurum). It belongs to the transition metals and is known for its yellow color and luster. Transition metals generally have higher density, strength, and melting points than elements in the main groups. They are known for their high electrical and thermal conductivity, making them important materials for various technological applications. Gold is highly significant economically, culturally, and historically.
Figure 1: Gold (source: Craiyon)
Origin of Gold
Gold is formed in the universe through nuclear reactions in stars during their life cycle. When a star perishes in a supernova explosion, it can release gold and other heavy elements into the surrounding space. These elements can then combine with other materials and eventually be transported to Earth through meteorites or other cosmic bodies.
Properties of Gold
Gold has many unique physical properties. It is one of the best conductors of electricity (third after silver and copper) and heat, making it useful in electronics and industry. Due to its high cost, gold, and silver are primarily used for special applications in electronics, and for electrical wiring, the more common and cheaper copper is used.
Gold is highly malleable, not only suitable for jewelry but also in electronics. It is estimated that one gram of gold can be used to create a thin wire (conductor) several kilometers long.
Gold is known for its high resistance to various chemical reactions and corrosion processes. Several factors contribute to gold's resistance:
- Chemical Inertness: Gold is a chemically inert metal, meaning it reacts very little with other chemicals. It withstands the action of acids, including strong acids such as sulfuric acid or nitric acid, which would dissolve or corrode other metals.
- Corrosion Resistance: Gold is resistant to corrosive processes that could damage or devalue other metals. This makes it a sought-after material for jewelry and investment products.
- Biocompatibility: Gold is a biocompatible metal, meaning it is well-tolerated in the human body and does not trigger strong immune or allergic reactions. This property allows for its use in medicine, such as in the production of implants, dental fillings, or even in cancer treatment.
- Stable Value: Gold is also resistant to degradation or devaluation over time. Its physical and chemical properties remain stable, giving it the characteristic of preserving value in the long term. This stability and resilience make gold popular as an investment and hedging tool.
| Property | Value |
|---|---|
| Color | Golden yellow |
| Hardness | 2.5 on the Mohs scale |
| Melting Point | 1064 °C |
| Boiling Point | 2836 °C |
| Density | 19.3 g/cm3 (pure gold) |
| Thermal Conductivity | 317 W/(m·K) (at 25 °C) |
| Electrical Conductivity | 44.7 × 10^6 S/m |
| Young's Modulus | 78 GPa |
| Solubility | Insoluble in water |
| Corrosion Resistance | Resistant to corrosive effects |
Mining and Processing of Gold
Gold mining is a complex process that involves various methods and technologies. The most common method of gold mining is surface or underground mining. Surface mining is mainly used where gold is dispersed in rock material near the Earth's surface. Underground mining is performed where gold is deeper underground and requires drilling, mining tunnels, and other techniques.
After mining, gold must be processed, which includes thorough purification, melting, and refining. During this process, impurities and additives are removed, and gold is obtained in its pure form, ready for further use.
Figure 2: Gold Smelting (source: Craiyon)
Uses of Gold
Gold has many different uses and is widely used in various industries. Here are some examples of the uses of gold:
- Manufacturing of jewelry and ornaments;
- Gold coins and bars;
- Artistic and historical artifacts;
- Financial and investment markets;
- Electronics and technology;
- Medicine and dentistry;
- Industrial catalysts;
- Architecture and construction;
- Space industry.
Gold Metal and Culture
Gold has a rich history associated with various cultures and civilizations. It has been considered a symbol of wealth, power, and beauty. In many cultures, gold has been used to create religious and ritual objects, crowns, and jewelry for rulers and nobility. Golden artifacts and treasures are often regarded as historical and cultural treasures.
Gold also appears in myths, legends, and fairy tales. It has been part of various legendary stories, such as the tale of the Golden Fleece sought by heroes in ancient Greek mythology.
Lastly, gold also has aesthetic value and is widely used in jewelry. Beautiful gold jewelry is a popular choice for various occasions, whether it be engagements, weddings, or other significant events.
Investing in Gold and Gold Companies
The value of gold as an investment tool has long been recognized. Gold serves as a stable store of value and is considered a safe haven during market uncertainties and economic crises. Investors often buy gold coins or bars as a way to diversify their portfolios and as a hedge against inflation and currency depreciation.
Investing in physical gold and investing in stocks of gold mining companies or companies trading in gold are two different strategies with different characteristics and potential outcomes. Significant for industrial use, the transition to green energy, including electromobility, and investment is also silver.
Investing in Physical Gold
Investing in gold is often seen as a way to preserve wealth and protect against inflation. Gold is considered a store of value, and its price often rises during periods of economic uncertainty or market volatility. When investing in physical gold, such as gold bars or coins, the main goal is to hold the metal itself. However, gold, as such, does not yield income, such as dividends or interest.
The value of gold is influenced by supply and demand, global economic conditions, and investor sentiment. Gold investors typically seek long-term capital growth and wealth preservation. However, it's important to note that the price of gold can also fluctuate.
Investing in Gold Companies
On the other hand, investing in companies focused on gold involves buying shares of firms involved in exploration, mining, gold production, or trading. These companies are part of the broader gold mining industry, and their performance is linked to various factors, including the price of gold, operational efficiency, exploration success, and management capabilities.
Investing in stocks of mining companies entails risks but also higher potential returns compared to investing in physical gold. While stocks of mining companies offer the potential for capital growth and dividends, they are also exposed to risks associated with the mining industry, such as mining complexity, costs, regulatory changes, and geopolitical factors. Investors in mining stocks must assess their financial health, prospects, and carefully monitor industry trends.
Among the largest gold miners and gold trading companies are the following.
| No. | Company | Ticker | Headquarters | Stock Exchange |
|---|---|---|---|---|
| 1 | Newmont Corporation | NEM | Greenwood Village, Colorado, USA | New York Stock Exchange (NYSE) |
| 2 | Barrick Gold Corporation | GOLD | Toronto, Ontario, Canada | Toronto Stock Exchange (TSX) |
| 3 | Agnico Eagle Mines Limited | AEM | Toronto, Ontario, Canada | Toronto Stock Exchange (TSX) |
| 4 | Franco-Nevada Corporation | FNV | Toronto, Ontario, Canada | Toronto Stock Exchange (TSX) |
| 5 | Wheaton Precious Metals Corp. | WPM | Vancouver, British Columbia, Canada | Toronto Stock Exchange (TSX) |
| 6 | Gold Fields Limited | GFI | Johannesburg, South Africa | Johannesburg Stock Exchange (JSE) |
| 7 | Royal Gold, Inc. | RGLD | Denver, Colorado, USA | NASDAQ |
| 8 | AngloGold Ashanti Limited | AU | Johannesburg, South Africa | Johannesburg Stock Exchange (JSE) |
| 9 | Kinross Gold Corporation | KGC | Toronto, Ontario, Canada | Toronto Stock Exchange (TSX) |
| 10 | Alamos Gold Inc. | AGI | Toronto, Ontario, Canada | Toronto Stock Exchange (TSX) |
| 11 | Pan American Silver Corp. | PAAS | Vancouver, British Columbia, Canada | NASDAQ |
| 12 | B2Gold Corp. | BTG | Vancouver, British Columbia, Canada | Toronto Stock Exchange (TSX) |
| 13 | Sibanye Stillwater Limited | SBSW | Westonaria, South Africa | Johannesburg Stock Exchange (JSE) |
| 14 | Harmony Gold Mining Company Limited | HMY | Randfontein, South Africa | Johannesburg Stock Exchange (JSE) |
| 15 | Osisko Gold Royalties Ltd | OR | Montreal, Canada | Toronto Stock Exchange (TSX) |
| 16 | SSR Mining Inc. | SSRM | Vancouver, British Columbia, Canada | NASDAQ |
| 17 | Eldorado Gold Corporation | EGO | Vancouver, British Columbia, Canada | New York Stock Exchange (NYSE) |
| 18 | Equinox Gold Corp. | EQX | Vancouver, British Columbia, Canada | Toronto Stock Exchange (TSX) |
| 19 | Sandstorm Gold Ltd. | SAND | Vancouver, British Columbia, Canada | New York Stock Exchange (NYSE) |
| 20 | Centerra Gold Inc. | CGAU | Toronto, Ontario, Canada | Toronto Stock Exchange (TSX) |
In the list, there are many Canadian companies that have favorable conditions for gold mining. All these companies are also dually traded on more common American exchanges. Detailed information and additional companies in the Gold sector can be found, for example, on the Financial Visualizations (FinViz) website: https://finviz.com/screener.ashx?v=111&f=ind_gold&o=-marketcap.
All-In Sustaining Costs per Ounce
All-In Sustaining Costs (AISC) per ounce is a key metric in the gold mining industry. It represents the total cost incurred by a mining company to produce one ounce of gold, incorporating all direct and indirect costs associated with production. AISC is a comprehensive measure that includes not only mining costs but also exploration, development, and sustaining capital expenditures.
Investors and analysts closely monitor AISC as it provides insights into the financial health and efficiency of gold mining operations. Lower AISC values are generally favorable, indicating that a company can produce gold at a lower cost, potentially improving profitability.
| Ticker | Company Name | All-in Sustaining Costs (US$/oz) |
|---|---|---|
| NEM | Newmont Corporation | $1,400 |
| AEM | Agnico Eagle Mines Limited | $1,140–$1,190 |
| GFI | Gold Fields Limited | $1,320 (+/- 5%) |
| KGC | Kinross Gold Corporation | $1,405–$1,450 |
Source: https://www.fitchratings.com/research/corporate-finance/fitch-rates-new-newmont-sr-unsecured-notes-a-02-01-2024 (quoted as of 21 January 2024).
Investors often compare a gold mining company's AISC to the current market price of gold. If the AISC is significantly lower than the current gold price, it may indicate that the company has a healthy profit margin. Conversely, a higher AISC relative to the gold price may raise concerns about profitability and operational efficiency.
Understanding this relationship helps investors assess the financial viability and competitiveness of a gold mining investment. It's essential to consider other factors such as production volume, exploration success, and overall market conditions when interpreting these figures.
Conclusion
Gold is a unique metal that has earned a special place in human culture, history, and economy. Its rarity, properties, and wide range of uses make it a material that is not only aesthetically appealing but also economically significant. Regardless of its form and application, gold remains a symbol of luxury, durability, and value.
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Based on the original Czech article: Zlato – co je, vlastnosti, jak se těží, investice do fyzického zlata a akcií těžařů zlata.