Gold

Gold is among the oldest and most significant materials in human history. The radiant yellow metal fascinates not only through its visual effect 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 the geopolitical situation.

Chemical and physical properties

Gold belongs to group 11 of the periodic table (coinage metals) and is one of the few elements that occurs native in nature — that is, 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 nitric-hydrochloric acid mixture 1:3) attacks it.
• Ductility: One gram of gold can be drawn into a wire about 165 metres long or beaten into gold leaf covering roughly 0.5 m² (around 0.1 µm thin).
• Density: At 19.32 g/cm³ gold is considerably heavier than most counterfeiting metals — a central feature in density measurement using the Archimedes principle.
• Electrical conductivity: Although it lags behind silver and copper, gold does not oxidise and remains permanently contact-friendly — hence indispensable in the electronics industry.

Occurrence and mining

Gold is extremely rare in the earth's crust, at about 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 enriched by weathering.

Worldwide mine production has for years been around 3,400–3,600 tonnes per year. The largest producing countries are China, Australia, Russia, Canada and Ghana. Added to this is so-called recycled gold from old jewellery, electronic scrap and dental gold, which makes up about 25–30% of annual supply.

Mining costs are measured across the industry as All-in Sustaining Costs (AISC) and, in 2023, averaged around 1,200–1,350 USD per troy ounce.

Trading forms and finenesses

Gold is offered in various finenesses. In the investment sector, fine gold (999) with at least 999 ‰ purity dominates. Jewellery and dental alloys contain alloying metals that influence colour, hardness and workability.

For investment purposes, only products with a fineness of at least 995 ‰ (bars) or 900 ‰ (coins) are recognised as investment gold within the meaning of the EU VAT exemption.

Price formation: how does the gold price arise?

The global gold price is quoted in US dollars per troy ounce (troy ounce = 31.1035 g). Two price mechanisms shape the market:

LBMA fixing: Twice daily (10:30 and 15:00 London time) banks electronically set 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 according to product, denomination and market situation. Small units (1-gram bars, fractional coins) carry significantly higher premiums than kilo bars or 100-gram bars.

Gold as an investment

Gold earns neither interest nor dividends. Its attractiveness as an investment is based on other properties:

1. Inflation protection: In the long term gold tends to preserve purchasing power, even though short-term deviations can be considerable.
2. Safe haven: In crisis and recession phases, demand for gold often rises, as it is regarded as the ultimate means of payment.
3. Low correlation: Gold correlates weakly with equities and bonds and can dampen portfolio fluctuations.
4. Currency protection: When the dollar is weak 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 trajectories can be found under historical precious metal prices.

Note: This does not constitute investment or tax advice. Tax aspects should be clarified with a tax adviser. In Malta, investment gold is VAT-exempt, while Malta levies no capital gains tax on private disposals of movable assets such as precious metals.

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 product).
• Gold mining shares: leverage on the gold price, but additional company risks.
• Gold savings plan: regular purchase of small quantities, using the cost-averaging effect.

You can calculate the melt value of jewellery or scrap gold directly — helpful before a sale or when valuing inherited items.

In brief

Gold combines unique physical properties with a millennia-old role as a store of value and currency 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.