Posted on March 08, 2023
Recently we did an article on the numerous and varied uses of silver in the economy, as an industrial metal. It seems only fair to do the same analysis on gold, which is what we talk about today.
Gold usage is quite a bit different than silver. A slight majority of silver is used for industrial purposes, such as in medical equipment, military equipment, electronics, solar panels, electric vehicles, and a host of other users. Gold; however, has a bit different usage profile. As you can see from the pic above from Research Gate, gold’s main use is as an investment and not in industrial production.
51% of gold is used in jewelry, which I consider to be an investment if for no other reason than jewelry is considered private possessions that typically get passed down. In other words, gold jewelry is a long-term wealth storage vehicle that families tend to keep over time. Gold represents real wealth for many cultures around the world while in jewelry form.
The next highest usage of gold is for bullion in the form of bars and coins. This is the stuff we typically buy as physical gold investors for long-term protection against inflation and financial calamities. Next, and no surprise on this, is central bank demand which has ticked up substantially since the last financial crisis in 2008-09.
The rest of the gold demand includes technology and ETFs. For those unaware, an ETF is a fund that has relatively low fees (compared with mutual funds) that invests in a specific market sector. It represents passive investing (not investing in physical metals) that typically comes from a 401k, pension, IRA, or private brokerage account. It generally indicates how much gold the generalist investor, who is not an everyday gold ‘bug’, may want to invest in the metal.
Gold’s primary use in technology is around electrical contacts, otherwise known as connections between different electronic components. Gold is used often in computer mainboards, which is where the hardware resides on the system. Gold is used due to its extreme level of malleability along with its superior conductivity with electricity.
Gold is a very efficient metal to use in many electronic applications with low voltage requirements, for those reasons. Without gold, it would be much more difficult to use our miniature computers known as smartphones. Gold has the lowest resistance to electricity of all metals. That is why much of electronic recycling contains a gold recovery process to reclaim that gold that was used in the manufacture of the components.
Gold has found use in several medical applications, much the same as silver. Gold is often used in dentistry due to its inert and malleable properties which resist corrosion. Gold also has an aesthetic appeal to many in the form of crowns and fillings. Gold has also been used in certain cancer treatments with some effectiveness.
Gold is also used as a colorant in glassmaking, especially in ruby color ranges. Gold is used in aerospace as a conductor and radiation shield. For example, astronaut helmet visors use gold to shield them against the unfiltered, damaging rays of the sun. Gold-layered polyester film is used as an anti-radiation shield in spacecraft. Lastly, gold is used extensively in mobile phones as an efficient electrical conductor.
Gold is used in high-end food products as an ornament and attractant to wealthy patrons. Getting a layer of gold leaf on top of a desert, for instance, can raise its attractiveness and its price substantially at a low cost to the restaurateur. Gold is also a valuable catalyst in certain chemical reactions, and therefore an important input into industrial-level chemistry.
In addition to these uses, gold is now being implemented into nanotechnology, pollution reduction in air and water, fuel cells and lithium-ion batteries, and solar cells. Gold is finding many of the same uses as silver, albeit in lesser overall quantities.
Still, I find it important to highlight the fact that gold actually has many uses in industry. The only difference to silver is that most gold is still held in investment or jewelry format, versus silver in which the slight majority is used for industrial production.
The next time someone tries to convince you that gold is just a rock, point them to this article. Let them know that without gold (and silver), modern life would simply not be the same. Much of the technology that we count on for everyday life requires both gold and silver to function. Much of the miniaturization of computer technology owes to the use of gold in circuitry applications, where no metal (including silver) can be a complete substitute for gold’s qualities.
When I first started researching gold, I didn’t begin to think of the myriad ways in which gold is used. I just saw it as either overpriced jewelry, or coins and bars. I learned over time that gold has many, many uses that make it incredibly valuable. If, for no other reason, then any substitute for gold in these applications would require a downgrade in quality of life. The truth is that our modern economy LOVES gold, which is why I do too.
This week I am looking at the gold jewelry products available at the online store. Gold jewelry is a great way to spread the wealth around, as long as the jewelry is composed of a good grade of gold. Thankfully, these products are and contain 1 oz of gold each. They are easy to compare to bullion in the form of weight and prices. While gold jewelry tends to come with a bit of a higher premium, these options are very solid when you compare the more diluted 10-14k gold products at your average jewelry store. These are simply better investments while being uniquely beautiful at the same time.