Gold In The Balance

Gold In The Balance

The “official” discovery of gold in Victoria in 1851 sparked an unprecedented period of mass migration to Australia with gold seekers from a wide range of different nationalities, ethnic groups, and cultural backgrounds following the lure of gold. They came from all corners of the globe with the larger migrant groups originating from places like Great Britain, Ireland, mainland Europe, America, and southern China. For some it was the adventure of a lifetime, an opportunity to find a fortune beyond their wildest dreams. For many others it was a chance to make a new life for themselves and their families, an opportunity to escape famine, poverty, unemployment, war, political instability, economic turmoil, and religious persecution.  

The 1850’s Victorian gold rushes were amongst the richest shallow alluvial gold rushes experienced in human history. Prospective gold seekers needed nothing more than a pick, shovel, and gold pan to make a life changing fortune from a major gold strike. Gold was especially attractive as it was one of very few ways in which the working class who made a meagre living through working long hours and performing back breaking manual labour could become rich. 

The gold rush brought sweeping and lasting changes to Victoria, producing great wealth and prosperity which ensured the future of the precarious Australian colonies. Rapid economic and population growth saw developments which had taken decades or centuries to occur in other continents to happen in the space of several years. Rapid urbanisation and infrastructure development also added to the mix, resulting in Victorians enjoying the highest standards of living anywhere in the world. The wealth derived from gold subsequently acted as the catalyst which evolved Victoria from a backwash sheep run into thriving independent state.

At the same time gold was also the catalyst which drove economic growth, capital investment, technical innovation, infrastructure development and political reform throughout colonial Australia and the wider British Empire. Gold also laid the foundations for Australian democracy and played a key role in establishing Australia as a nation.

But why gold? What makes gold so special?

Gold seeking migrants landing at Queen’s Wharf, Melbourne, circa 1860.
Source: National Library of Australia

The Fascination of Gold

Gold’s unique physical and chemical properties along with its beauty and distinctive colour has made it one of the most valuable and sought after of all precious metals. Throughout the course of human history gold has been mined, crafted, worshipped, fought over, plundered and traded. Given its widespread use and significance gold has long been established as a hallmark of power, wealth, security, influence, and social status throughout the course of human civilisation.  

As a matter of fact the very word gold is said to have derived from the metal’s distinctive colour. Gold is said to have been derived from the Old English word Geolu which means “yellow”. Furthermore, gold’s chemical symbol on the Periodic Table of Elements which is Au refers to the Latin word Aurum which means “shining dawn” or “glow of sunrise”. In turn the word Aurum is derived from another Latin word Aurora, the Roman Goddess of the Dawn. This is reinforced in gold’s long standing association with the sun, immortality and divine power, not to mention its widespread use by many ancient civilisations in religious rituals and cultural practices.  

Gold was especially important to early civilisations as it could be readily obtained as a free metal without the use of complex separation techniques, unlike other metals like silver, copper, lead or tin. Gold was also a source of fascination for the ancient alchemists who aspired to convert base metals such as lead and copper into pure gold. Whilst these attempts were all in vain the exploits of ancient alchemy laid the foundations for modern day chemistry and metallurgy.

According to the World Gold Council at least 219,891 tonnes of gold has been mined throughout the course of human history with around two-thirds of this total having been mined over the last 75 years alone. This goes to show gold’s continued value, relevance and significance to humanity as technology has progressed and new uses for gold have been developed. 

Gold also retains its physical and chemical properties regardless of how many times it is recycled or repurposed. As such much of the gold mined throughout the course of human history remains in circulation in some shape or form as a useful and valuable commodity.  

Gold seekers panning for alluvial gold, circa 1862.
Source: State Library of Victoria

The Properties of Gold

Pure elemental gold under standard scientific conditions occurs as a soft, heavy, dense, non-toxic and non-magnetic metal with a metallic lustre and distinctive dull-yellow colour. Gold is renowned for its unique physical and chemical properties which cannot be replicated and sets it apart from the other metals. Some of these properties are summarised in the following table:

Gold is chemically inert and exhibits a high level of chemical stability. This led to the ancient alchemists to dub gold the “noble metal”. Gold can only be attacked and dissolved by a small selection of acids and chemicals which includes but is not limited to activated carbon, cyanide, mercury, thiosulphate, and aqua regia which is a mixture of nitric and hydrochloric acids. Gold doesn’t easily combine with other chemical substances thus when found in nature gold mostly occurs in a metallic form. This is known as “free gold” or “native gold”.      

Gold’s chemical stability and inertness also means that it is one of the least chemically reactive of all the metals. Gold doesn’t react to air or water thus it won’t readily tarnish or corrode. Even after being exposed to weathering and erosion on the earth’s surface over long periods of geological time (periods of time which can span over tens of millions or even hundreds of millions of years) gold still retains its distinctive shine, metallic lustre, and dull-yellow colour.

Gold is also very soft which means that it can be easily worked and shaped. Gold’s high ductility allows it to be easily draw into wire strands whilst its high malleability allows it to be easily hammered and flattened into thin sheets or plates known as “gold leaf”. In addition to its softness gold can be cast, carved, polished, heated and alloyed without it tarnishing or using its unique properties. With these properties in hand gold finds widespread use in the production of artwork, jewellery, ornaments, statues, and decorations.    

Being a solid metal under normal conditions light cannot easily pass through gold. As such gold is an excellent reflector of both light and solar radiation. Gold is also an excellent conductor of both heat and electricity. As such gold finds widespread use in advanced modern-day technologies including electronics, aeronautical engineering, and space exploration.   

Gold’s chemical stability, inertness, and non-toxic nature also makes it biocompatible and suitable for use in the human body without reacting or damaging human tissue. As such gold is finding an increasing use in modern-day medicine and healthcare in items including dental fillings and implantable medical devices as well as the treatment of cancer, arthritis and malaria. Gold’s inertness and biocompatibility also makes it edible and safe to digest, thus it is used as a decorative additive in high-end foods and liquors.    

Recently gold has been found to have catalytic properties which increase the rate of certain low-temperature chemical reactions without being consumed or altered in any way. Gold therefore has potential for use in emerging nanotechnologies used in industrial manufacturing, environmental engineering and other industries. 

Finally, gold is a very heavy and dense metal, being 19 times heavier than water and 7 times heavier than quartz which is one of the most abundant minerals in the Earth’s crust. Gold prospectors and miners take advantage of gold’s density by using water and gravity to wash and separate the heavier gold nuggets and specks from the lighter sand and sediment when using alluvial mining methods such as panning, cradling, tubbing, puddling, or sluicing.  

Small specks of alluvial gold in a gold pan. Alluvial mining methods including gold panning take advantage of gold’s density by using gravity to separate gold from the lighter sand. 

The Carats and Colours of Gold

Whether found in nature or used in alloys to make jewellery gold rarely occurs in a pure elemental state. It is therefore important to measure the purity or quality of gold so that its value can be determined.    

The most common measure of the purity of precious metals like gold is the carat which originates from the Mark, a gold coin used widely throughout Germany during the 19^th Century which weighed exactly 24 carats. The term carat is therefore used to measure the parts or percentage of pure gold that an alloy is composed based on a total of 24 parts. For example 18-carat gold which is commonly used in jewellery is composed of 18 parts or 75% pure gold with the remaining 6 parts or 25% consists of other metals like copper, silver, nickel, or palladium. Pure elemental gold is expressed as 24-carat gold.

Another unit of measurement used for the purity of gold is its hallmark or fineness, also known as the millesimal fineness system. This system measures the content of pure gold in parts per thousand. For example 18-carat gold is said to have a fineness of 750 parts which is equivalent to a purity of 75%. Pure elemental gold (99.9% purity) is expressed as having a fineness of 999 parts.

What’s the purity of your gold? You can use the table below to help determine the carats, fineness, or purity of the gold in a ring, necklace or other piece of jewellery in your possession:

Gold mined historically at Bendigo is remarkably pure, having a purity which ranges between 92% and 96%. This is the equivalent of 22 – 23 karat gold which has a fineness of 920 - 960 parts per thousand. Silver and copper are found to be the only impurities found to occur in the native gold mined at Bendigo.          

Native gold in its pure elemental form is naturally a very soft metal and so it will easily scratch or wear down if worn as common jewellery. Gold is therefore mixed with other metals to form alloys which are widely used in jewellery as they are cheaper, more durable and resistant to wear. Gold can be combined with other metals in various proportions to create alloys which take up a variety of different colours.  

One of the most common gold alloys used in jewellery is rose gold which is combined with copper to make a reddish colour. Another common gold alloy is white gold which is made with the addition of metals such as palladium, silver, nickel or copper to make a white colour. Gold can also be combined with silver and copper in different proportions to form green, yellow, or red gold.     

A gold-bearing quartz specimen that was uncovered at the Central Deborah during underground mining operations back in. The distinctive dull-year colour of the gold found in this specimen tells us that the gold has a very high purity. 

Worth Its Weight in Gold

The old sayings  “Worth its weight in gold” and “Good as gold” are ones that rely on gold’s value.

If you look up the gold price on the internet or in the newspaper today you will notice that it is priced in US Dollars (USD). This has been the case since the end of World War 2 when the USD emerged as the default global reserve currency for international trade and finance.

The gold price is always quoted per troy ounce, what does this mean?

All precious metals have traditionally been weighed using the troy weight system. This system dates back to the Middle Ages. The troy weight system’s name is derived from the French town and international trading hub of Troyes where it is believed this system was developed.    

The troy weight system uses units of measurement including the grain, pennyweight, troy ounce, and troy pound. Today the troy ounce continues to be used worldwide as the standard unit of measurement when weighing and valuing precious metals including gold, silver, platinum, palladium, rhodium, iridium, osmium, and ruthenium to ensure a consistency in their pricing.

24 Grains = 1 Pennyweight
20 Pennyweights = 1 Troy Ounce
12 Troy Ounces = 1 Troy Pound
31.1 grams = 1 Troy Ounce

One troy ounce of gold is equal to one full teaspoon.  

The troy ounce should not be confused with the standard or avoirdupois ounce which equals 28.4 grams

Weighing a cake of retorted gold with a set of gold scales at a Bendigo bank, circa 1940’s
Source: State Library of New South Wales

The Uses of Gold

Gold has been widely used throughout human history with the Ancient Egyptians mining for this precious metal along the banks of the Nile River as far back as 4,000 years ago. Historically gold has been used in jewellery, ornaments, decorative gilding, cultural practices, foreign trade, investment and currency however as civilisation has progressed and new technologies have been developed over time the use of gold has extended into new cutting-edge industrial applications including electronics, aerospace, space exploration, nanotechnology, and healthcare.

Below is just some of the many uses of gold:

Coins: Gold has historically been used for minting coins for well over 2,500 years. Between 1855 and 1931 22-carat British gold sovereigns were minted in Australia however their production was discontinued when Great Britain abandoned the gold standard during the Great Depression. Gold coins are still made today and continue to be traded and purchased by investors and collectors alike for their value, rarity, and historical significance.        

Currency and Foreign Trade: Gold has been traded by human civilization for over 4,000 years. The ancient Egyptians, Greeks and Romans adopted gold as part of their economic and monetary systems, using the precious metal for major transactions, religious offerings, and political tributes. For over 100 years gold was the cornerstone of foreign trade and monetary systems through the gold standard, a system in which paper money could be readily exchanged into gold coins or bullion at a fixed gold price and currency exchange rates. The international convertibility of gold into U.S. dollars was ended by U.S. President Richard Nixon on August 15, 1971, during the so-called “Nixon Shock”, effectively bringing an end to the gold standard and lifting the fixed gold price. Today gold is traded on the open market with a fluctuating price which is dictated by supply, market demand, inflation, currency exchange rates, geopolitics, and the global economy.     

Jewellery: Gold is combined with other metals including silver, copper, nickel, platinum and palladium to form metal alloys which are used in rings, necklaces, earrings, bracelets, watches, brooches, pins, anklets, cufflinks, and other bangles. According to the World Gold Council approximately 97,645 tonnes or 44% of the world’s gold stocks have been used in jewellery.       

Decoration, Ornaments and Artwork: Gold’s softness, malleability, and ductility allows it to be readily crafted into intricate and delicate coatings and shapes. Historically gold has been widely used in the production and coating of statues, ornaments, and artefacts which are of religious, spiritual or cultural significance. Gold is also widely used in the age old trade of gilding in which very thin sheets of gold, silver or metal leaf are applied as a decorative feature onto material like wood, metal, plaster, paper, leather, glass, porcelain or stone. Gilding is used widely in picture framing, artwork, woodwork, building, decorative painting, bookbinding, interior decoration, and even ornamental leatherwork to add a rich and luxurious finish to an object or design. 

Investment: Gold is renowned for holding its value over long periods of time. Gold is also considered to be a hedge or safe haven for investors during times of economic volatility and geopolitical tension thus it is seen as an alternative investment to real estate, cash, or the stock market. As such large quantities of gold have been stockpiled by governments, central banks, financial institutions and investors alike. According to the World Gold Council approximately 89,644 tonnes or 41% of the world’s gold stocks are held as an investment or financial security.        

Cultural Traditions: Rings, necklaces and other jewellery made of gold alloys is traditionally used to mark special occasions and milestones such as engagements, weddings, birthdays, anniversaries, graduations and even sporting premierships. In Indian culture owning gold is seen as a sign of social status and wealth thus it is common for gold to be passed down through the generations and given as a dowry at weddings. According to the Minerals Council of Australia, India households are the world’s largest consumer of gold and is said to hold at least 21,000 tonnes or 10% of the world’s gold stock in the form of jewellery and savings.

Electronics: Gold’s durability, ductility, electrical conductivity, chemical stability and resistance to corrosion sees it used in contactors, connectors, circuit boards, central processing units, memory cards, capacitators, pins, sockets, ports, and wiring for a wide variety of electronic devices including mobile phones, printers, cameras, computers, televisions, and microchips.   

Buildings: Thin and transparent films of gold are placed over the windows of buildings in tropical and desert environments as a protective shield that reflects both heat and light. Gold leaf has also been used as a coating and decorative gilding on the domes and architectural features of cathedrals and other historical buildings.     

Aerospace and Space Exploration: Gold’s reflectivity and high-melting point has seen it become widely used in protecting fighter jets, airliners, astronauts, satellites, and space craft from solar radiation and extreme temperatures. Coatings of thin films of gold are placed over the visors of space suits and the and windshields of jets, space suits, modules, space stations and other space craft as a way of reducing exposure to both heat and glare.   

Healthcare: gold is widely used in modern-day healthcare and medicine in items including surgical tools, dental fillings, diagnostic imaging, surgical lasers, and implantable medical devices as well as the treatment of cancer, arthritis and malaria.   

Educational Resources and Further Reading

Various government departments and industry groups have prepared a wide range of educational resources, learning activities and further reading on gold, as well as other related topics including mining, metals, minerals and geology. Follow the links below for more information and resources:

Resources Victoria (Department of Energy, Environment and Climate Action)  
https://resources.vic.gov.au/

Geoscience Australia (Australian Commonwealth Government)
https://www.ga.gov.au/

Gold Industry Group
https://goldindustrygroup.com.au/

Minerals Council of Australia
https://minerals.org.au/

World Gold Council
https://www.gold.org/