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 millennia as a store of value, a monetary metal and a functional material.
Gold is one of the oldest and most significant materials in human history. The radiant yellow metal fascinates not only through its visual appeal 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 natively in nature – that is, in pure metallic form. An overview of its outstanding properties:
- Corrosion resistance: Gold dissolves in neither hydrochloric acid nor nitric acid; only aqua regia (a 1:3 mixture of nitric and hydrochloric acid) attacks it.
- Ductility: One gram of gold can be drawn into a wire around 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 counterfeit metals – a key feature in density measurement using Archimedes' principle.
- Electrical conductivity: Although it trails silver and copper, gold does not oxidise and remains permanently conductive – making it indispensable in the electronics industry.
Occurrence and production
Gold is extremely rare in the Earth's crust, at around 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 by weathering.
Global mine production has stood at around 3,400–3,600 tonnes per year for many years. The largest producing countries are China, Australia, Russia, Canada and Ghana. In addition, so-called recycled gold from old jewellery, electronic scrap and dental gold accounts for roughly 25–30 % of annual supply.
Production costs are measured industry-wide as All-in Sustaining Costs (AISC) and, in 2023, stood at around USD 1,200–1,350 per troy ounce on an industry average.
Trading forms and fineness
Gold is offered in various finenesses. In the investment sector, fine gold (999) with a minimum purity of 999 ‰ dominates. Jewellery and dental alloys contain alloying metals that influence colour, hardness and workability.
| Carat | Fineness (‰) | Typical use |
|---|---|---|
| 24 carat | 999.9 | Investment bars, fine gold coins |
| 22 carat | 916 | Krugerrand, Sovereign, Vreneli |
| 18 carat | 750 | High-quality jewellery |
| 14 carat | 585 | Jewellery (continental standard) |
| 9 carat | 375 | Jewellery (UK standard) |
| 8 carat | 333 | Entry-level jewellery |
For investment purposes, only products with a fineness of at least 995 ‰ (bars) or 900 ‰ (coins) qualify as investment gold that is exempt from VAT under EU rules.
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 pricing mechanisms shape the market:
LBMA fixing: Twice a day (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 forms the basis for dealer prices.
Buying price (dealer) = spot price − spread
Selling price (dealer) = spot price + premium (agio)
The premium (agio) varies by product, denomination and market situation. Small units (1-gram bars, fractional coins) carry considerably 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 qualities:
- Inflation hedge: Over the long term, gold tends to preserve purchasing power, even though short-term deviations can be considerable.
- Safe haven: In times of crisis and recession, demand for gold often rises as it is regarded as the ultimate means of payment.
- Low correlation: Gold has low correlation with equities and bonds and can dampen portfolio volatility.
- 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 trends can be found under historical precious metal prices.
Note: This does not constitute investment or tax advice. Tax matters (capital gains treatment, 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 shares: Leverage on the gold price, but additional company-specific risks.
- Gold savings plan: Regular purchase of small amounts, using pound-cost averaging.
You can calculate the melt value of jewellery or scrap gold directly – useful before a sale or when valuing inherited pieces.
In brief
Gold combines unique physical properties with a millennia-old role as a store of value and monetary metal. For investors it is less a yield instrument than a building block for protection and diversification – its price always reflects confidence in other asset classes and currencies.