Gold, the Industrial Metal?

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Gold is primarily known as a rare, beautiful and coveted precious metal, desired for use in jewelry. Gold throughout the ages has also served as money in the form of coins and bars. Central banks still hold gold as a monetary asset, nearly fifty years after the international gold standard was abolished. Gold has also been used in dentistry for filling cavities.

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Silver is similar to gold in that it too is prized for its beauty and use in crafting jewelry, silverware and silver ornaments. Silver, like gold has served as money for thousands of years. For centuries, nations minted silver coins for use as currency for their citizens. Silver, however, has not been used in coinage for nearly fifty years in the United States

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Silver’s industrial demand constitutes about 50-65% of overall annual demand. Silver’s use in industry is well known. Silver is used in electronics as it conducts electricity better than any other metal. Silver is also used in solar panels and photographic applications.

Less know are gold’s industrial applications.

Gold – The Industrial Metal

Gold’s unique properties also lend itself well to industry. Gold doesn’t tarnish or corrode, is extremely malleable, conducts electricity and can be blended with other metals like copper and silver. As such, gold is in demand for industrial applications and has remained relatively steady around 8-15% of overall annual gold demand. Gold’s primary industrial uses are in electronics, micro chips and medical devices and applications.

Due to the high price of gold, manufacturers are constantly innovating to create designs that use lower volumes of gold. As a result, industrial demand for gold in electronics has fallen in recent years. The World Gold Council recently reported in a market update, however, that gold demand for use in electronics will grow for the first time in 2017 since 2010. The WGC noted that electronics demand has been growing since the fourth quarter of 2016 and projects that “promising emerging technologies may support this part of the market over the coming years.”

Gold – The Space Age Metal

Gold is headed to outer space. Gold’s radiant shine is used in spacecraft panels to reflect heat. A thin gold film reflects the infra red radiation and heat that would otherwise penetrate the spacecraft if the radiation was otherwise. The same thin gold film also is used on astronauts’ helmets to prevent infrared glare and heat from overwhelming the wearer.

Gold is also used as a lubricant in spacecraft because liquid lubricants like oil would degrade and evaporate due to the radiation in outer space.

Gold’s Industrial Future

The World Gold Council noted in its market update:

“Changes are afoot in the technology sector. Smartphones are becoming increasingly powerful, electric and self-driving vehicles could revolutionise the automotive industry, and emerging nanotechnology could transform solar energy. All of this could have a positive impact on gold demand. ”

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This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.