Gold
Also: Aurum, Au, Fine Gold, Crisis Currency
Gold (chemical symbol Au, atomic number 79) is a yellow, corrosion-resistant precious metal that has been used for thousands of years as a store of value, monetary metal, and material.
Gold is one of the oldest and most significant materials in human history. The brilliantly yellow metal fascinates not only through its visual impact but above all through a unique combination of chemical stability, physical density, and global acceptance as a medium of exchange. The current gold price reflects the interplay of supply, demand, currency movements, and geopolitical conditions.
Chemical and physical properties
Gold belongs to Group 11 of the periodic table (coinage metals) and is one of the few elements that occurs in nature in its native form — i.e. in pure metallic form. Its outstanding properties at a glance:
- Corrosion resistance: Gold dissolves neither in hydrochloric acid nor in nitric acid; only aqua regia (a mixture of nitric and hydrochloric acid 1:3) attacks it.
- Ductility: One gram of gold can be drawn into a wire approximately 165 metres long or beaten into gold leaf covering around 0.5 m² (roughly 0.1 µm thick).
- Density: At 19.32 g/cm³, gold is considerably heavier than most counterfeit metals — a key characteristic in density determination using the Archimedean principle.
- Electrical conductivity: Although it falls behind silver and copper, gold does not oxidise and remains permanently conductive — making it indispensable in the electronics industry.
Occurrence and mining
Gold is extremely rare in the Earth's crust at approximately 0.004 ppm (parts per million). It occurs in primary deposits (quartz veins, epithermal and mesothermal systems) as well as in secondary placer deposits where it has been concentrated through weathering.
Global mine production has been running at around 3,400–3,600 tonnes per year for several years. The largest producing countries are China, Australia, Russia, Canada, and Ghana. In addition, recycled gold from old jewellery, electronic scrap, and dental gold accounts for approximately 25–30% of annual supply.
Mining costs are measured industry-wide as All-in Sustaining Costs (AISC) and stood at around USD 1,200–1,350 per troy ounce on an industry average in 2023.
Trading forms and fineness levels
Gold is available in various fineness levels. In the investment sector, fine gold (999) with at least 999 ‰ purity predominates. Jewellery and dental alloys contain alloying metals that influence colour, hardness, and workability.
| Karat | Fineness (‰) | Typical use |
|---|---|---|
| 24 karat | 999.9 | Investment bars, fine gold coins |
| 22 karat | 916 | Krugerrand, Sovereign, Vreneli |
| 18 karat | 750 | High-quality jewellery |
| 14 karat | 585 | Jewellery (German standard) |
| 9 karat | 375 | Jewellery (UK standard) |
| 8 karat | 333 | Entry-level jewellery |
For investment purposes, only products with at least 995 ‰ fineness (bars) or 900 ‰ (coins) are recognised as investment gold for the purposes of EU VAT exemption.
Price formation: how is the gold price set?
The global gold price is quoted in US dollars per troy ounce (troy ounce = 31.1035 g). Two pricing mechanisms shape the market:
LBMA Fixing: Twice daily (at 10:30 and 15:00 London time) banks electronically determine the LBMA Gold Price — the reference price for mining companies, central banks, and industrial buyers.
Spot price: The spot price is traded continuously on the futures markets (COMEX New York, TOCOM Tokyo) and is the basis for dealer prices.
Buying price (dealer) = Spot price − Spread
Selling price (dealer) = Spot price + Premium (agio)
The premium (agio) varies depending on the product, denomination, and market conditions. Small units (1-gram bars, fractional coins) carry significantly higher premiums than kilo bars or 100-gram bars.
Gold as an investment
Gold generates neither interest nor dividends. Its attractiveness as an investment rests on other characteristics:
- Inflation protection: Over the long term, gold tends to preserve purchasing power, even if short-term deviations can be substantial.
- Safe haven: In crisis and recession phases, demand for gold frequently rises as it is regarded as the ultimate means of payment.
- Low correlation: Gold correlates weakly with equities and bonds and can dampen portfolio volatility.
- Currency protection: When the dollar weakens, the gold price often rises, as the two tend to move in opposite directions.
The current sentiment indicator for the precious metals market is shown by the Fear & Greed Index. Long-term price trends are available under Historical Precious Metal Prices.
Note: This does not constitute investment or tax advice. Tax aspects (speculative holding period § 23 EStG, VAT exemption for investment gold) should be clarified with a tax adviser.
Investment forms compared
- Physical gold (bars, coins): Direct ownership, no counterparty risk, but storage and insurance costs.
- Gold ETCs/ETFs (e.g. Xetra-Gold): Exchange-traded, easy access, but no direct gold ownership (depending on the product).
- Gold mining stocks: Leverage on the gold price, but additional company-specific risks.
- Gold savings plan: Regular purchase of small quantities, utilising the cost-average effect.
The melt value of jewellery or scrap gold can be calculated directly — useful before a sale or when valuing inherited items.
Key takeaway
Gold combines unique physical properties with a millennia-old role as a store of value and monetary metal. For investors it is less a return instrument than a building block for hedging and diversification — its price always reflects confidence in other asset classes and currencies.