Gold is not the rarest metal, but it’s quite hard to find and extract in large quantities with pre-industrial technology. Its principal characteristics of being highly corrosion-resistant and easily worked made it highly desirable (and still do) for decorative purposes, and even more so industrially, e.g. where you need high quality electrical connectors.
Mainly ancient tradition. It is fairly easy to process and as far as ancient people were concerned it was indestructible it does not tarnish like silver or copper. It does not dissolve in normal acids and solvents. It is pretty and if you alloy it with other metals it can have a variety of colours. Ancient people used it as a form of exchange as people desired it and if you put it in a damp cupboard it would still be unchanged when you came to use it. Gold has retained its value because it is still rare and people like to adorn them selves with it. Its rarity is explained at
The site gives a guesstimate of total gold production since the beginning of human metallurgy as ten thousand million troy ounces. Platinum is much rarer. The entire worlds production could probably fit in your living room but I challenge you to tell at a distance to tell if a ring was made of platinum white gold (gold silver alloy) or aluminum. If the rest of the world cant tell if your bling is real the show-off value is reduced, that is why for “look at me Im loaded” statements it is gold every time. Once Napoleon served a state banquet on Aluminum plates as it was much more valuable than gold at the time. Once the rarity was lost the value was gone. If the Apollo astronauts had discovered that moon dust was universally rich in gold the price of the stuff would probably have plummeted after we’d found how to transfer all the gold to earth.
There’s a growing feeling in the platinum and palladium market that the worst is over.
After dropping to the lowest in at least half a decade in January, prices since rallied back into a bull market as the outlook for continued low U.S. interest rates reignited the appeal of precious metals. The two commodities will climb about 20 percent through the end of next year, partly on higher demand from carmakers, according to 12 traders and analysts surveyed by Bloomberg.
The outlook for supply and demand will be key for miners to refiners at the industry’s annual gathering in London this week. Impala Platinum Holdings Ltd., the world’s second-biggest producer, has forecast deficits in the medium to long term as demand for materials used to curb harmful car emissions grows. Investors, who for months sold through funds, have started buying again.
“The fundamentals for platinum in particular are slowly improving,” said Tom Kendall, the head of precious metals strategy at ICBC Standard Bank Plc in London. “We’ve almost certainly seen the bottom of the market for both platinum and palladium.”
Prices Dropped
Prices plunged as much as 48 percent since 2014, hurting mining companies’ profits and forcing some, such as Lonmin Plc, to shutter unprofitable production, cut jobs and seek cash from shareholders. Platinum reached a seven-year low and palladium the weakest in five years at the start of 2016 as concerns that global economic growth was faltering rocked equity markets and sent industrial metals tumbling.
That probably marked the bottom, according to the median estimate in the Bloomberg survey. Platinum should climb about 10 percent to $1,153 an ounce by year-end and reach about $1,283 by the end of 2017. Palladium may advance 11 percent to $660 an ounce by late December and about $738 by the end of next year.
Sentiment is already improving among exchange-traded product investors. Platinum holdings, which slumped to a two-year low in late February, have since risen 4.6 percent to 75.1 metric tons, near a five-month high, data compiled by Bloomberg show. Palladium assets gained 3.2 percent to 70.5 tons.
There may be a bumpy path ahead to higher prices. Anglo American Platinum Ltd., the world’s largest miner of the metal, in February said it expects prices to remain depressed, before mine closures and and less capital expenditure in the coming years lead to supply constraints.
Mine shutdowns and safety stoppages have already hit production in South Africa, where almost three quarters of platinum and about 40 percent of palladium is mined. A key issue in the next few months will be workers’ wage talks. A deadlock in negotiations led to a five-month strike in 2014, the longest in the country’s history.
Bulls also point to rising demand, mainly because of increasing car sales amid stricter environmental rules around the world. About 40 percent of platinum consumption and 80 percent of palladium comes from the auto industry, according to Johnson Matthey Plc, which makes one in three car autocatalysts.
The platinum market will return to a physical deficit this year, with palladium’s shortage set to deepen, GFMS, a research unit of Thomson Reuters Corp., said Thursday. Bloomberg competes with Thomson Reuters in selling financial and legal information and trading systems. Societe Generale SA estimates a shortage of 190,000 ounces for platinum and 1.1 million ounces for palladium this year.
“The metals look like they’re going up, rather than down,” said Andy Pfaff, the chief investment officer for commodities at MitonOptimal Group in Cape Town. “We’re starting to see some buyers return and pretty soon that will attract the interest of bigger investors, which could push us into a prolonged bull market.”
Newmont Mining (NYSE: NEM) chief executive Gary Goldberg looks for both lower global mine supply and improving demand prospects from India and China to bode well for the gold in the medium term.
Nevertheless, he conceded, there is near-term potential for the yellow metal to give back some of its big gains so far in 2016 due to potential for the U.S. dollar to rise.
Goldberg set aside a portion of an earnings webcast Thursday to talk about the outlook for gold. The company late Wednesday reported first-quarter earnings that were down from the year-ago quarter but topped fourth-quarter results, as well as consensus analyst expectations.
“In the near term, we anticipate that a relatively strong U.S. dollar and subdued global economic growth will continue to constrain metals prices,” the CEO said.
Nevertheless, he described gold’s 16% run higher in the first quarter as the strongest upward trend since 1980.
“In the medium term, we expect prices to rise on improved fundamentals,” Goldberg said. “On the supply side, three-year average gold discoveries have dropped by more than 75% between 2007 and 2012, and mine supply is expected to decrease by more than 5% from 2015 to 2020 due to aging ore bodies and slower project development.”
As prices fell back from the record high in 2011, producers have scrambled to cut costs, in many instances scaling back on exploration and capital spending.
“On the demand side, we expect demographic trends in China and India to drive steady growth,” Goldberg said. “Taken together, the two countries represent more than 50% of current consumer gold demand.
“China’s middle class is expected to grow to 500 million by 2020, and India’s middle class is also expected to double and surpass 500 million by 2025.”
Presumably, as denizens of these two nations have more money to spend, they will want to purchase more gold.
Still, Newmont officials are trying to plan for the future cautiously in case gold prices turn down again, Goldberg related. He said “we’re prepared for all scenarios” and “our planning process builds from a gold price of $900 per ounce.”
A fifth of the world’s gold is hidden under London, worth an estimated £172 billion ($248 billion).
The vaults under the Bank of England on Threadneedle Street are said to hold 5,134 tonnes of gold.
This makes up the majority of the 6,256 tonnes kept safe beneath London’s streets, according to the BBC, which recently sent a reporter to visit the 300,000 square foot space.
Gold is measured in bars weighing precisely 400 troy ounces, or 12kg, worth around £250,000 ($500,000). Gold is used by investors as a safe asset to invest in when the stock market and other assets are more volatile, because it is so low risk.
The price of gold can thus be used a barometer for the confidence of investors. When it goes up, investors are looking to invest in gold because they may be worrying about higher risk assets.
It can also be traded and used as a way to exchange funds in a hard and universal currency.
While Britain doesn’t own as much gold as other countries, it does guard one-fifth of global stock. Partly because it has a system called the London Good Delivery which sets a standard for large bars, making them easier to trade.
Nonetheless, the shape of the bars the BBC sees in the vault varies. Some look like loaves of bread while others have slanted edges to allow them to be picked up more easily. They are kept rows of blue numbered shelves in the silence of the concrete-encased underground safe, the BBC said.
If keeping your wealth in a metal stored in an underground safe sounds like something straight out of history, or even fantasy, hold tight. The vaults, which were built in the 1930s, are still accessed using several 3ft long keys.
Security experts think the analogue measure is safer than electronic access alone, but there are electronic safeguards too. Visitors have to speak a password into a microphone that matches voices to a select few saved samples.
The vaults have their own rich history too, the BBC reports. When Britain’s gold bars were moved to Canada during World War II, one vault became a staff canteen. Cruise posters still line the walls. It was later used as a bomb shelter.
The vast size of the vaults can partly be accounted for by the clay bedrock they are built on. Because clay is soft and gold can be heavy, the bars are only stacked four pallets high in the top level vaults and six pallets high in the bottom level. Otherwise they would sink into the ground.
Last year, the Royal Mint put gold bars on sale for the first time. Measuring 53mm by 118mm and 8mm thick, the Royal Mint-branded bars were put on sale at around £24,000 to £25,000, depending on the price of gold.