Global gold production: Appreciating the socio-economic benefits
Gold proved to be a unifier in the medieval ages. For instance, King (2021) recalled the Spanish explorers, led by Hernan Cortes, the renowned Spanish Conquistador (Dowd, 2016) met the native people of South America when they first arrived in the “New World” in the 16th century.
The Spanish explorers realised indigenous civilisation had been established in the New World for millennia. The vast ocean remained a firm block between these two distinct cultures; they lived entirely different lives; they spoke different languages; and had never come into contact with each other.
Despite this plethora of socio-cultural differences, they were found to have one thing in common. That is, both cultures held gold in the highest esteem and were already using it to create some of their most significant objects.
King (2021) and Dowd (2016) recounted the symbolic use of gold as an accomplishment, purity, beauty and power in every established culture throughout human history. Hoffmann (n.d.) acknowledged the use of gold in medieval periods for coinage and integrally for decorative purposes.
The precious metal served as a source of raw material for the manufacture of ornaments or pieces of jewellery, statuaries or monuments, goblets or glasses and artilleries or weapons. Further, the colonisation of the New World during the 16th century facilitated gold mining and refinery in Central and South America prior to shipment to Europe. However, the mines in the New World were a greater source of silver than gold.
The National Mining Association (as cited in Dowd, 2016) described gold as an antiquated precious metal whose usage among cultures as decorative objects in modern-day Eastern Europe dates back to 4000 BC. Ancient Egypt benefited tremendously from its gold-bearing region called Nubia.
It was during this era that the fire assay method was discovered by the Babylonians. The fire assay method remained one of the effective means of testing the purity of gold. Due to its efficacy, the method is still applicable today.
Dowd (2016) added, for several centuries, gold was used essentially to manufacture jewellery; and to create idols for worship. This trend continued until around 1500 BC when the ancient Egyptian empire first declared gold as an official medium of exchange for international trade.
The popularity of Egypt surged when it created the coin called shekel, and it was accepted as the standard unit of measurement in the Middle East. The shekel weighed about 11.3 grams; it was manufactured from a naturally occurring blend known as electrum; and its alloy composition was one-third silver and two-thirds gold.
Bullion By Post (2021) hinted that Jewelers’ decision to include copper in the composition of gold alloy helps rose gold to obtain its reddish colour. Another metal included in the rose gold alloy is silver. Both copper and silver are relatively cheaper.
Generally, this makes the unit price of rose gold quite affordable in the precious metals’ markets. Green gold is found in the earth’s crust with trace quantities of copper and other metals. It is called electrum; and could also be manufactured with cadmium.
Further, green gold has a very subtle green colour which is attributed to the silver component. Green gold is described by experts as the only blend that occurs naturally. It is worth noting green gold alloy with cadmium component is toxic to the skin.
Bullion By Post (2021) maintained, pure gold could be supplied in the form of ingots or bars as raw materials. These gold bars could be blended with other metals for specific purposes. In addition to their wealth as raw materials, gold bullion ingots and bars are often described by investment experts as safe-haven for stores of value.
Moreover, they are easily traded and free from counterparty risks. Inarguably, the inclusion of gold in investments improves the diversification of the portfolio; and serves as a strong hedge against risk inherent in other investments. However, minted gold bullion coins as legal tender tend to have tax advantages over gold investment bars and ingots.
The Minerals Commodity Summaries for 2019 released by the United States Geological Survey (as cited in King, 2021) depicted how gold was utilised in the United States during the period. The percentage distribution showed jewellery manufacturing consumed 50% of all gold mined and imported into the country in 2019.
During the same period, gold used for electronics-related items constituted 37% while the remaining 13% were spread between minting of official coins (8%) and other uses (5%). Conspicuously missing from the summary analysis during the period was data on gold bullion. Though not explicitly stated, one may be impelled to infer gold bullion formed part of the other uses, which constituted 5%.
Peridot (n.d.) argued, gold jewellery is usually not pure gold. Simply, they are blends or combinations of various metals. It added, different gold colours are created when pure gold is alloyed with copper, zinc, silver, nickel and palladium.
These colours represent different gold jewelleries. Peridot (n.d.) reiterated, that green, rose, white and yellow are the most common gold colours in vogue, though there are many other colours that are derived from gold alloys (Hustedt Jewelers, 2021; World Gold Council, 2021a).
Dowd (2016) reaffirmed the global adoption and implementation of the gold standard several decades ago. The author described the gold standard as one of the limited commodities that could readily be taught of and considered as a monetary asset or currency; and affirmed its continuous use as a safe-haven investment asset in perilous economic times; and as a strategic way of preserving wealth.
Inarguably, gold’s sterling features and qualities transcend its natural beauty to include its role as the most useful precious metal across the globe. IG (2020) noted the presence of volatilities even when equity markets are characterised by marked stability.
Types and Durability of Gold
Generally, nuggets are found in and on the banks of streams. King (2021) affirmed, that craftsmen could employ primitive tools to transform gold nuggets into valuable ornamental objects. Thus, a transformation of gold nuggets into economic utility does not require sophisticated tools and technology. However, it could assure jewellers of decent earnings and improved living standards.
Similarly, Hoffmann (n.d.) revealed, it is possible for jewelers to transform pure gold into desired intricate structures and shapes in commercial quantities with less sophisticated metal working tools.
Davis (n.d.) identified the resilience of gold and its ability to resist oxidation as some of its major properties. Due to exposure to oxygen at room temperature and room conditions, metals often form oxides later on their respective surfaces. However, gold does not form this layer with ease. Further, gold is not affected by most bases and acids.
It is possible for an ounce of gold to be stretched to cover more than 300 square feet. The density of gold is extremely high; it is measured at 19.3 grams per cubic centimeter which is slightly greater than lead.
In terms of pricing in the gold markets, pink or rose gold is more affordable than the other gold colours. This is because copper, a relatively less expensive metal, is alloyed with pure gold in the creation of rose gold.
The copper component in the alloy composition increases the durability of rose gold relative to white and yellow gold. Silver has proven to be a very strong and influential metal in the alloy composition of pure gold. For instance, the green nuance of the gold blend is facilitated by the silver component (Peridot, n.d.).
Roberto (2018) observed a relationship between generation and fashion trends. He noted, fashion trends are reinvented by every generation to suit the members’ tastes and preferences. The foregoing holds true for the popularity and choice of gold colours among generations. The growing taste for white gold was believed to have increased in the 1990s after a surge in the popularity of yellow gold from the 1960s through the 1980s. The author noted the growing popularity of rose gold in recent years; and that, all jewellery is timeless. To this end, the choice of a particular gold colour is contingent on the consumer’s taste and preference; and what he or she seeks to showcase to the rest of the world.
Generally, jewelleries with the inscription gold-electroplated or gold-plated imply they have very thin layers of gold on the surface of the base metal. The latter could be either brass dipped into gold or stainless steel.
Electroplating enables jewelleries to have gold-appearance. Peridot (n.d.) indicated, for a gold layer to be named electroplated or gold-plated, it must be of at least 10-carat gold quality; and must have the thickness of at least seven-millionths of an inch. The durability of very thin-layered jewelleries cannot be guaranteed; it is more likely than not for extremely thin-layered gold jewelleries to wear off over time.
It is possible for some bullion gold coins to be minted from pure gold that weighs 24 carats. Notable among these include the one-ounce gold Britannia which weighs 31.10 grams. To ensure other coins are hardened, they are minted from blends. However, the final weights of these blends do not determine their respective market prices. Rather, the gold content in the alloys determines their market prices. To illustrate, one-ounce gold Krugerrand has a fineness of 916.7 and weighs more than an ounce; the gold content is estimated at 31.10 grams in addition to the weight of other blending metal or metals.
The market price is not contingent on its weight but on the gold content in the alloy. However, it is imperative to note, that gold coins are a member of the pure gold bullion investments family. That is, similar to gold bars and ingots, gold coins serve as safe haven for store of value; they are free from counterparty risks of government or bank actions; and have the potential to diversify investment portfolios (Bullion By Post, 2021).
The quality of gold-plated jewelleries is determined by the stamp – “GP; G.P; GEP; G.E.P” for 10-carat gold-plated jewelleries; “GO; G.O; RGP; R.G.P” for 10-carat gold overlay jewelleries; and “GF; G.F.” for 10-carat gold-filled jewelleries. For 10-carat gold-plated jewelleries, consumers are likely to come across the following stamps: “10K GEP; 10K G.P” or ”10K GP.” Consumers of 10-carat gold overlay jewelleries may see stamps such as “1/40 10RGP; 1/40 R.G.P” or ”1/40 10K GO” while 10-carat gold-filled jewelleries may be affixed with either of these stamps: “1/20 10K GF” or “1/20 10K G.F.” The modern stamp for sterling silver is S925; previous versions (which are still in use) are .925 or 925. The number on each stamp stands for 7.5% blended metals and 92.5% pure silver (Peridot, n.d.).
Peridot (n.d.) asserted, for individuals with skin allergies, vermeil gold jewelleries remains a better choice than the other gold-plated metals; because the former has a thicker gold layer and adapts sterling silver as its base metal.
Unlike many other gold-plated jewelleries, vermeil gold jewelleries are usually not marked. However, gold jewelleries with “925” stamp may imply they are vermeil. Contrary to the claims of Hustedt Jewelers (2021), Peridot (n.d.) argued, vermeil jewelleries have thicker gold layers than gold-filled jewelleries.
Peridot (n.d.) hinted, that the base metals for gold-filled jewelleries are either copper or brass, covered by sheets of gold, implying gold-filled jewelleries are actually not filled with gold. This notwithstanding, it has some good qualities. For instance, gold-filled jewelleries remain the safest choice for most people with sensitive skin. The gold content in the alloy must be at least 5% (or 1/20) of the total weight; and the gold content must be of at least 10-carat gold quality. With reasonable care, the gold layer on gold-filled jewelleries is not expected to wear-off or fragment.
The fire refining process for gold was found to be less effective following the introduction of chlorine gas and electro-refining technologies in the 19th century. These novel technologies were very useful in refining impure gold; and they increased the pure gold extraction rates than had earlier been achieved through fire refining. The electro-refining technology was invented by Emil Wohlwill and introduced in Hamburg, Germany in 1878. Earlier, the chlorine gas technology was invented by E. B. Miller and patented in Great Britain in 1867 (Hoffmann, n.d.).
Hoffmann (n.d.) revealed, that generally, gold contained in major gold ores is found in its natural form. Gold ores could be endogenetic and exogenetic. They are endogenetic when they are formed within the earth. Layered and vein deposits of elemental gold in quartzite or blends of quartzite and various iron sulfide minerals, especially pyrite (FeS2) and pyrrhotite (Fe1-x S) are examples of endogenetic gold ores. Usually, endogenetic gold ores found in sulfide ore bodies are still in their elemental form and very finely disseminated. This state of endogenetic gold ores makes it difficult, if not impossible, for the gold to be concentrated through the use of methods as applied to alluvial gold deposits.
However, gold ores are termed as exogenetic when they are formed at the surface of the earth. Alluvial gold remains the most “celebrated” example of exogenetic gold ores; and the type most commonly mined in ancient times. King (2021) and Hoffmann (n.d.) described alluvial gold as the type of gold commonly found in flood plains, riverbeds and streambeds. Invariably, alluvial gold is elemental and often made up of very fine particles.
It is believed weathering actions of rain, wind and change in temperature on rocks that contain gold help in the formation of alluvial gold deposits. Further, it is possible for exogenetic gold to exist in the form of oxidised ore bodies formed through a process known as secondary enrichment. Under the secondary enrichment process, sulfides and other metallic elements are gradually leached away to leave behind insoluble oxide minerals and gold as surface deposits.
Peridot (n.d.) stressed, the durability of gold-overlay jewelleries over time is assured by their thicker gold coatings. Unlike gold-filled jewelleries, gold content in the alloy of gold-overlay jewelleries may be less than 5% (or 1/20) of the total weight. However, the gold content must be of at least 10-carat gold quality; and the base metal could be stainless steel, copper or brass.
Similarly, Roberto (2018) was of the firm belief that the durability and cost of a piece of jewellery are predicated on the quantity of gold in carats used in the manufacturing process. For instance, 14-carat gold jewellery has more other metals in the alloy and less gold than 18-carat gold jewellery. The inclusion of more other metals in the blend makes 14-carat gold jewellery more affordable and durable for daily wear. However, the high gold content in 18-carat gold jewellery makes it more expensive and durable for daily wear as well.
Gold Mining and Concentration Techniques
Hoffmann (n.d.) maintained, the most common gold mineral is natural or native gold. It accounts for nearly 80% of the gold found in the earth’s crust. Occasionally, it is possible to find natural gold as nuggets as large as half of an inch or 12 millimetres in diameter. However, on rare occasions, it is possible to discover natural gold nuggets that weigh up to 50 kilograms; the largest found thus far weighed 92 kilograms. The content of silver in natural gold is estimated between 0.1 and 4.0%; silver content in electrum, which is gold-silver blend is believed to be between 20% and 45%. The colour of electrum is believed to vary from pale yellow to silver white; and typically linked to mineral deposits of silver sulfide.
Dowd (2016) noted, around 1200 BC, the Egyptians began to experiment with the casting method known as lost-wax casting. Under this method, duplicate gold sculptures were cast from original wax sculptures. This process allowed for creation of sculptures that were characteristically intricate. The effectiveness of the casting method called for its retention in the contemporary gold manufacturing industry.
Hoffmann (n.d.) asserted, it is possible to blend gold with tellurium to form other minerals. Notable among these include sylvanite (AuAgTe4) and calaverite (AuTe2). There are many other gold minerals that could be derived thereof. However, they are sufficiently rare and have little economic significance. South Africa is home to 50% of the total gold ore mineral reserves known across the globe. Imperatively, the world’s largest single body of gold ore is found in the Witwatersrand in South Africa. Most part of the remaining 50% is divided among the United States, Russia, Brazil, Canada, China and Australia.
Smith (2020) reviewed mining activities across the globe with special emphasis on gold mining and its related activities in Africa. The author found a positive relationship between environmental destruction, corrupt political activities, increased risk of human lives, illicit financing of conflicts and increased smuggling on one hand; and increased demand for gold on the other.
The narratives painted a gloomy picture of the immediate-derived benefits by African economies from gold exploration; while advanced and emerging economies effectively account for their respective mining and production levels to accelerate development at various levels. However, in the mining town of Kamituga, Smith (2020) recounted the activities of transporters, artisanal miners, traders and toolmakers were the main drivers of the local economy.
Hoffmann (n.d.) affirmed, the mining and mineral processing technique that is adapted is contingent on the nature of the gold ore deposits. For instance, economic justification for use of extensive mineral mining technique for oxide ore deposits is not feasible since these deposits are usually of low grade – between 3 and 10 parts per million. The appropriate technique for oxide ores is the use of explosives in shattering the deposits and piling into heaps for extraction by cyanidation. The author noted, these heaps could be 15 to 30 metres in height and hundreds of metres long.
Extraction of gold from alluvial deposits, Hoffmann (n.d.) revealed, could be carried out through dredging from underneath rivers and ponds; or through sluicing from flood plains and river banks with high-pressure hydraulic hoses. Concentration of alluvial deposits requires little or no comminution; rather, gravity techniques such as tabling or jigging suffice for the extraction process. The tabling or jiggling technique allows for slurry to be channelled through jigs or over ridged or grooved tables. The latter retain the denser gold particles while permitting the much less dense sand and gravel to pass over.
Hoffmann (n.d.) hinted, it is not uncommon to find deposits of endogenetic gold ores containing elemental gold that is highly disseminated within a base metal sulfide mineral. The gold ore deposits are mined, crushed, ground and finally, concentrated. The concentration process commences with separation through gravity. The latter allows for coarse particles of natural gold to be recovered. The process concludes with froth flotation to concentrate the sulfide mineral fraction containing the gold.
Hoffmann (n.d.) averred, the cyanidation process allows for more gold to be recovered than any other process. The cyanidation process allows for oxidisation and dissolution of metallic gold in a solution of alkaline cyanide. Atmospheric oxygen is the oxidant employed in the cyanidation process. The atmospheric oxygen, in the presence of aqueous solution of sodium cyanide, causes the dissolution of gold. Further, it affects formation of sodium hydroxide and sodium cyanoaurite, as claimed by the so-called Elsner reaction which states, gold-bearing solution is separated from the solids when gold dissolution is complete.
The cyanidation technique of vat-leaching has been found to be more appropriate for ores with higher gold content. That is, content in excess of 20 grams of gold per tonne of ore. The vat-leaching process allows for slurry of ore and solvent to be held for several hours in large tanks equipped with agitators. Heap-leaching is adapted to extract gold from low grade ores. Dilute solution of sodium cyanide is used to spray the heaps, which infiltrates through the piled ore, causing dissolution of the gold. Usually, vat-leaching circuits have tremendous amounts of solids and solution associated with them. This is attributed to the very low concentrations of gold in the ores (Hoffmann, n.d.).
Lebert (as cited in Smith, 2020) noted, transportation of gold in the East African region during the COVID-19 outbreak became a challenge. The perceived challenge led to the attraction of many middlemen who ostensibly facilitated shipment of the mined gold from the point of production to the preferred market destination. This development affected the eventual earnings of miners; greater part of the overall gold value was earned by middlemen and final buyers who in turn, sold to final consumers.
Hoffmann (n.d.) asserted, capital costs associated with the purchase and installation of liquids and solids equipment for gold processing are very huge. This affects production costs and eventual price per ounce of gold both on the domestic and global markets. In order to eliminate these huge costs, novel technologies have been developed to circumvent the entire separation process. One of the novel techniques involves adding granular activated carbon to the ore slurry during or after the gold solubilisation process is complete. The dissolved gold is readily absorbed onto the carbon, thereby extracting it from solution; and allowing for the granular carbon to be separated from the current unproductive ore by running the slurry through a screen.
After the foregoing process is complete, gold is leached from the carbon particles through strong solution of sodium hydroxide and sodium cyanide; and electro-winning is used to recover the gold directly from solution onto steel wool. The Merrill-Crowe process could also be used to recover the gold directly from solution. Generally, the Merrill-Crowe process facilitates deoxygenation of gold-bearing solution and its passage through a filter-press, where the gold is extracted from solution by reduction with zinc metal powder (Hoffmann, n.d.).
Gold has its chemical compounds. These include potassium dicyanoaurite, K[Au(CN)2]; and chloroauric acid, HAuCl4.The latter is used occasionally for ceramics colouring; and as an intermediate in the production of other gold compounds. The former is mostly used in gold electroplating baths. Gold salts have proven to be very useful to the human body; they are often used as anti-inflammatory drugs in the treatment of rheumatoid arthritis (Hoffmann, n.d.).
Following the outbreak of COVID-19 in 2020, the World Gold Council (as cited in Smith, 2020) predicted investors would adapt gold as key portfolio hedging strategy; and that, the pandemic was more likely than not to have lasting effect on allocation of investment assets in global economies. Further, COVID-19 was likely to reaffirm the value of gold as strategic investment asset. Indeed, the price per ounce of gold on the global markets witnessed upward adjustments during the pandemic outbreak in 2020.
However, prices offered miners by local buyers in Africa witnessed significant reduction. The level of exploitation in the Democratic Republic of Congo was believed to be dire; more middlemen were attracted instead of the regular reliance on the network of local traders in the supply chain (Lebert as cited in Smith, 2020).
Authors’ Note
The above write-up was extracted from recent Publication on “Implications of Gold Trading for the Global Economy” by Ashley, Osei-Assibey, Gariba, Asubonteng and Ackah (2024) in the International Journal of Business and Management (IJBM). DOI No.: 10.24940/theijbm/2024/v12/i3/BM2403-012