Gold does much more than glitter (by Mr.Varun Aggarwal)

The story of gold is as rich and complex as the metal itself.

Wars have been fought for it; love has been declared with it. Ancient Egyptian hieroglyphs portray gold as the brilliance of the sun; modern astronomers use mirrors coated with gold to capture images of the heavens.

By 325 BC the Greeks had mined for gold from Gibraltar to Asia Minor. In 1848 AD James Marshall found flakes of gold whilst building a sawmill near Sacramento and so triggered the gold rush in California.

Held securely in national vaults as a reserve asset, gold has an irrefutable logic; released from the tombs of pharaohs and emperors alike, gold has an undeniable magic.

Gold is the oldest precious metal known to man and for thousands of years it has been valued as a global currency, a commodity, an investment and simply an object of beauty. Gold is rare. Today there are 165,000 metric tonnes of stocks in existence above ground. If every single ounce of this gold were placed next to each other, the resulting cube of pure gold would only measure 20 metres in any direction.

The demand for this precious and finite natural commodity occurs in many geographies and sectors. Around 60% of today's gold becomes jewellery, where India and China with their expanding economic power are at the forefront of consumption. In East Asia, India and the Middle East, gold has powerful cultural meaning, accounting for approximately 70% of the world's gold jewellery in 2009.

But jewellery creates just one source of demand; investment, central bank reserves and the technology sector are all significant. Each is driven by different dynamics, adding to gold's strength and independence.

In creating supply, gold mining companies operate on every continent of the globe. This broad geographical dispersal means that issues, political or otherwise, in any single region are unlikely to impact the supply of gold. Beyond mine production, recycling accounts for around a third of all current supply. In addition, central banks can also contribute to supply should they sell part of their gold reserves. It is worth noting that after 18 years as net sellers, collectively central banks are now effectively net buyers, causing not only a significant decrease in supply but a corresponding, simultaneous increase in demand.

Numbers and facts draws together some of the more extraordinary statistics which gold has accumulated across the centuries and around the world.

Major Characteristics

• Gold (Chemical Symbol-Au) is primarily a monetary asset and partly a commodity.
• Gold is the world's oldest international currency.
• Gold is an important element of global monetary reserves.
• With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of high-karat jewellery.
• Less than one-third of gold's total accumulated holdings are used as "commodity" for jewellery in the western markets and industry.

Global Scenario London is the world's biggest clearing house. Mumbai is under India's liberalised gold regime. New York is the home of gold futures trading. Zurich is a physical turntable. Istanbul, Dubai, Singapore, and Hong Kong are doorways to important consuming regions. Tokyo, where TOCOM sets the mood of Japan. Factors Influencing the Market Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans. Hedging interest of producers/miners. World macroeconomic factors such as the US Dollar and interest rate, and economic events. Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices. In India, gold demand is also determined to a large extent by its price level and volatility.

Heritage Despite its unrivalled properties, gold is an inert material. It does nothing until man discovers it, mines and refines it and bends it to his will. So the history of gold is very much the history of civilisation. Here are some points in time where that history was made. 3600 BC First smelting of gold Egyptian goldsmiths carry out the first melting or fusing of ores in order to separate the metals inside. They use blowpipes made from fire-resistant clay to heat the smelting furnace.   2600 BC Early gold jewellery Goldsmiths of ancient Mesopotamia (modern-day Iraq) craft one of the earliest pieces of gold jewellery, a burial headdress of lapis and carnelian beads with willow leaf-shaped gold pendants. Image © Trustees of The British Museum   1200-1500 BC Advances in jewellery making Artisans develop the lost-wax jewellery casting technique. The process allows for improved hardness and colour variation which in turn broadens the market for gold products.

1223 BC Creation of Tutankhamun's funeral mask Instantly recognised the world over, the funeral mask of Tutankhamun is a triumph of gold craftsmanship from the ancient world. 950 BC Solomon builds gold temple The Queen of Sheba from Yemen presents King Solomon of Israel with 2,500 kilos of gold, bringing the contents of his treasury to 5,700 kilos. Solomon uses part of his holdings to construct his famed temple, allegedly overlaid with gold. © Nir Levy   600 BC First gold dentistry practiced The first use of gold in dentistry as the Etruscans begin securing substitute teeth with gold wire. Bio-compatibility, malleability and corrosion resistance still make gold valuable in dental applications.   564 BC First international gold currency created King Croesus develops improved gold refining techniques, permitting him to mint the world's first standardised gold currency. Their uniform gold content allows 'Croesids' to become universally recognised and traded with confidence.   300 First gold nanoparticles The Romans use gold to colour the Lycurgus Cup. Melting gold powder into glass diffuses gold nanoparticles throughout which then refract light, giving the glass a luminous red glow. Image © Trustees of The British Museum   1300 Hallmarking practice established The world's first hallmarking system, scrutinising and guaranteeing the quality of precious metal, is established at Goldsmith's Hall in London - where London's Assay Office is still located today. Image © The Assay office, Birmingham   1370 The Great Bullion Famine begins During the years 1370-1420, various major mines around Europe become completely exhausted. Mining and production of gold declines sharply throughout the region in a period known as 'The Great Bullion Famine'.   1422 Venice's record year The Venice Mint strikes a record 1.2 million gold ducats using 4.26 metric tonnes of gold from Africa and Central Asia. These small coins prove popular as they are easy to mint and carry plenty of value. Image © Classical Numismatic Group, Inc., CC-BY-SA-2.5, Wikimedia Commons   1511 Ferdinand unleashes invasion force King Ferdinand of Spain proclaims "Get gold, humanely if you can, but at all hazards, get gold!", launching unprecedented expeditions to the Americas. Within years, the Inca and Aztec civilisations would be virtually destroyed by Spanish conquerors. 1717 UK gold standard commences Britain moves onto a de facto pure gold standard, as the government links the currency to gold at a fixed rate (establishing a mint price of 77 shillings, ten and a half pennies per ounce of gold). 1803 First gold electroplating practiced The first recorded experiment in electroplating is carried out by Professor Luigi Brugnatelli at the University of Pavia. Gold electroplating ensures improved conductivity, now essential to many 21st century technologies. Image © Deep Blue, CC-BY-SA-3.0, Wikimedia Commons   1848 California Gold Rush begins John Marshall discovers gold flakes while building a sawmill near Sacramento, California. The greatest gold rush of all time follows as 40,000 diggers flock to California from around the World.   1885 South African Gold Rush begins While digging up stones to build a house, Australian miner George Harrison finds gold ore on Langlaagte farm near Johannesburg. Miners flock to the region. South Africa will go on to become the source of 40% of the world's gold. Image © Terry Davis   1885 First Faberge Easter egg crafted Carl Faberge makes his first gold Imperial Easter Egg for Tsar Alexander III. Named The Hen Egg, it was commissioned as a gift from the Tsar to his wife, the Empress Maria Fedorovna, beginning a tradition that lasts until 1917. Image © PetarM, CC-BY-SA-3.0, Wikimedia Commons,   1870-1900 Adoption of gold standard All major countries other than China switch to the gold standard, linking their currencies to gold. The practice of bimetallism is abandoned.   1925 Gold standard returns The UK returns to the gold standard at pre-war parity of $4.86=£1 with sterling convertible to gold at 77sh 10.5d per standard ounce. This follows the country's departure from the gold standard six years previously at the outbreak of World War I.   1933 Roosevelt suspends gold President Roosevelt suspends US dollar convertibility to gold (gold at US$20.67/oz). The export of all transactions in, and the holding of gold by private individuals, is forbidden. Presidential proclamation makes the dollar convertible again in January 1934 at a new price of $35 per troy ounce.   1939 World War II closes gold market The London gold market is closed on the outbreak of war, as at the beginning of World War II. The world will later return to a fixed system of exchange rates, this time with currencies fixed to the dollar and the dollar convertible into gold.   1944 Bretton Woods conference The Bretton Woods conference sets the basis of the post-war monetary system. The US dollar is set to maintain a $35=1 oz gold conversion rate. Other currencies are fixed in terms of US dollar, thus forming a Gold Exchange Standard.   1961 First gold bonded microchips Gold bonding wire is used in microchips engineered at Bell Labs in the US. Nowadays literally billions of chips are bonded this way every year, controlling all manner of indispensible electrical devices.   1961 First gold in space The first manned space flight uses gold to protect sensitive instruments from radiation. In 1980, 41kgs of gold is included in space shuttle construction through brazing alloys, fuel cell fabrication and electrical contacts.   1967 First South African Krugerrand The Krugerrand is introduced in 1967, as a vehicle for private ownership of gold. This iconic coin is actually intended for circulation as currency.   1971 Gold window closed The Bretton Woods system of fixed exchange rates comes to an end as President Nixon "closes the gold window", suspending US dollar convertibility to gold. The world enters its present day system of floating exchange rates.   1985 First gold-based arthritis treatment Pharmaceutical giant, SmithKline & French, develops Auranofin, a gold-based drug for the treatment of rheumatoid arthritis. The drug receives regulatory approval and goes on sale for the first time.   1999 First Central Bank Gold Agreement The First Central Bank Gold Agreement (CBGA) is agreed. 15 European central banks declare that gold will remain an important element of their reserves and collectively cap gold sales at 400 tonnes per year over next five years.   2001 First gold used in heart surgery Boston Scientific markets the first gold-plated stent (Niroyal) used in heart surgery. Inserted inside large arteries and veins, such stents act like scaffolding, propping open the blood vessels to allow adequate flow. Image © Richard Lee   2003 K-gold launched in China The World Gold Council creates an entirely new market segment with the launch of K-gold, the first 18k jewellery in China. The jewellery, in predominantly white and yellow gold, takes its inspiration from Italian design.   2004 Launch of SPDR® Gold Shares The market is transformed by an innovative, secure and easy way to access the gold market. Six years later SPDR® exceeds $55bn in assets under management.   2009 Central banks return to buying In the second quarter of the year, central banks collectively become net purchasers of gold for the first time in two decades. This reflects a combination of slowing sales from European banks and growing purchases by emerging market countries. Image © National Geographic   2010 Gold price sustains record highs Fiat currencies are undermined by inflation fears and successive financial crises. The London pm fix achieves 35 separate successive highs in the year to date.   2011 Gold in catalytic converters Gold used in catalytic convertors by a leading European diesel car manufacturer. The first use of gold in automotive emissions control.   2012 Olympic Gold The custom of awarding gold, silver, and bronze in sequence for the first three places dates back to the 1904 Summer Olympics in St. Louis, Missouri in the United States. At the 2012 games, the International Olympic Committee stipulates that each gold medal must have a minimum of at least six grams of gold. The London 2012 gold medals are the biggest and heaviest summer Olympic medals ever made.   Gold's contribution Gold powers the internet. It underpins our economy. It is the bedrock of a portfolio. It is the catalyst for future revolutions in science. It expresses love in many languages. And it carries memories across generations and cultures. Gold already underpins the world's major currency systems; today the G20 nations are debating an even greater role for gold in a new world financial architecture. Learn more about the proposed role for gold in the international currency basket. Gold has provided an important store of wealth to diverse investors, from individuals to institutions, for centuries. Gold is the metal of love. It owns the moment when "I will" becomes "I do". In jewellery form, it can quicken the heart-rate and grow in significance to become the most precious possession a woman will ever own. From space exploration, to nanoparticle technology, to the bonding wire at the heart of an iPhone, gold's extraordinary physical properties make it essential to a wide range of scientific applications. From local training and employment opportunities to the creation of infrastructure, from the generation of governmental revenues to the development of whole communities, gold mining makes a tangible and transformational contribution to entire countries around the world. Gold does much more than glitter.