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The History Of Gold

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Through the ages men and women have cherished gold, and many have had a compelling desire to amass great quantities of it--so compelling a desire, in fact, that the frantic need to seek and hoard gold has been aptly named "gold fever."

Gold was among the first metals to be mined because it commonly occurs in its native form, that is, not combined with other elements, because it is beautiful and imperishable, and because exquisite objects can be made from it. Artisans of ancient civilizations used gold lavishly in decorating tombs and temples, and gold objects made more than 5,000 years ago have been found in Egypt.

Particularly noteworthy are the gold items discovered by Howard Carter and Lord Carnarvon in 1922 in the tomb of Tutankhamun. This young pharaoh ruled Egypt in the 14th century B.C. An exhibit of some of these items, called "Treasures of Tutankhamun," attracted more than 6 million visitors in six cities during a tour of the United States in 1977-1979.

The graves of nobles at the ancient Citadel of Mycenae near Nauplion, Greece, discovered by Heinrich Schliemann in 1876, yielded a great variety of gold figurines, masks, cups, diadems, and jewelry, plus hundreds of decorated beads and buttons. These elegant works of art were created by skilled craftsmen more than 3,500 years ago.

gold 03 0001The ancient civilizations appear to have obtained their supplies of gold from various deposits in the Middle East. Mines in the region of the Upper Nile near the Red Sea and in the Nubian Desert area supplied much of the gold used by the Egyptian pharaohs. When these mines could no longer meet their demands, deposits elsewhere, possibly in Yemen and southern Africa, were exploited.

Artisans in Mesopotamia and Palestine probably obtained their supplies from Egypt and Arabia. Recent studies of the Mahd adh Dhahab (meaning "Cradle of Gold") mine in the present Kingdom of Saudi Arabia reveal that gold, silver, and copper were recovered from this region during the reign of King Solomon (961-922 B.C.).

The ancient civilizations appear to have obtained their supplies of gold from various deposits in the Middle East. Mines in the region of the Upper Nile near the Red Sea and in the Nubian Desert area supplied much of the gold used by the Egyptian pharaohs. When these mines could no longer meet their demands, deposits elsewhere, possibly in Yemen and southern Africa, were exploited.

Artisans in Mesopotamia and Palestine probably obtained their supplies from Egypt and Arabia. Recent studies of the Mahd adh Dhahab (meaning "Cradle of Gold") mine in the present Kingdom of Saudi Arabia reveal that gold, silver, and copper were recovered from this region during the reign of King Solomon (961-922 B.C.).

The gold in the Aztec and Inca treasuries of Mexico and Peru believed to have come from Colombia, although some undoubtedly was obtained from other sources. The Conquistadores plundered the treasuries of these civilizations during their explorations of the New World, and many gold and silver objects were melted and cast into coins and bars, destroying the priceless artifacts of the Indian culture.

knoxNations of the world today use gold as a medium of exchange in monetary transactions. A large part of the gold stocks of the United States is stored in the vault of the Fort Knox Bullion Depository. The Depository, located about 30 miles southwest of Louisville, Kentucky, is under the supervision of the Director of the Mint.

Gold in the Depository consists of bars about the size of ordinary building bricks (7 x 3 5/8 x 1 3/4 inches) that weigh about 27.5 pounds each (about 400 troy ounces; 1 troy ounce equals about 1.1 avoirdupois ounces.) They are stored without wrappings in the vault compartments.

Aside from monetary uses, gold is used in jewelry and allied wares, electrical-electronic applications, dentistry, the aircraft-aerospace industry, the arts, and medical and chemical fields.

The changes in demand for gold and supply from domestic mines in the past two decades reflect price changes. After the United States deregulated gold in 1971, the price increased markedly, briefly reaching more than $800 per troy ounce in 1980. Since 1980, the price has remained in the range of $320 to $460 per troy ounce. The rapidly rising prices of the 1970's encouraged both experienced explorationists and amateur prospectors to renew their search for gold. As a result of their efforts, many new mines opened in the 1980's, accounting for much of the expansion of gold output. The sharp declines in consumption in 1974 and 1980 resulted from reduced demands for jewelry (the major use of fabricated gold) and investment products, which in turn reflected rapid price increases in those years.

Gold is called a "noble" metal (an alchemistic term) because it does not oxidize under ordinary conditions. Its chemical symbol Au is derived from the Latin word "aurum." In pure form gold has a metallic luster and is sun yellow, but mixtures of other metals, such as silver, copper, nickel, platinum, palladium, tellurium, and iron, with gold create various color hues ranging from silver-white to green and orange-red.

Pure gold is relatively soft--it has about the hardness of a penny. It is the most malleable and ductile of metals. The specific gravity or density of pure gold is 19.3 compared to 14.0 for mercury and 11.4 for lead.

a longboxImpure gold, as it commonly occurs in deposits, has a density of 16 to 18, whereas the associated waste rock (gangue) has a density of about 2.5. The difference in density enables gold to be concentrated by gravity and permits the separation of gold from clay, silt, sand, and gravel by various agitating and collecting devices such as the gold pan, rocker, and sluicebox.

Mercury (quicksilver) has a chemical affinity for gold. When mercury is added to gold-bearing material, the two metals form an amalgam. Mercury is later separated from amalgam by retorting. Extraction of gold and other precious metals from their ores by treatment with mercury is called amalgamation. Gold dissolves in aqua regia, a mixture of hydrochloric and nitric acids, and in sodium or potassium cyanide. The latter solvent is the basis for the cyanide process that is used to recover gold from low-grade ore.

The degree of purity of native gold, bullion (bars or ingots of unrefined gold), and refined gold is stated in terms of gold content. "Fineness" defines gold content in parts per thousand. For example, a gold nugget containing 885 parts of pure gold and 115 parts of other metals, such as silver and copper, would be considered 885-fine. "Karat" indicates the proportion of solid gold in an alloy based on a total of 24 parts. Thus, 14-karat (14K) gold indicates a composition of 14 parts of gold and 10 parts of other metals. Incidentally, 14K gold is commonly used in jewelry manufacture. "Karat" should not be confused with "carat," a unit of weight used for precious stones.

The basic unit of weight used in dealing with gold is the troy ounce. One troy ounce is equivalent to 20 troy pennyweights. In the jewelry industry, the common unit of measure is the pennyweight (dwt.) which is equivalent to 1.555 grams.

The term "gold-filled" is used to describe articles of jewelry made of base metal which are covered on one or more surfaces with a layer of gold alloy. Quality marks may be used to show the quantity and fineness of the gold alloy. In the United States no article of gold alloy coating of less than 10-karat fineness may have any quality mark affixed. Lower limits are permitted in some countries.

No article having a gold alloy portion of less than one-twentieth by weight may be marked "gold-filled," but articles may be marked "rolled gold plate" provided the proportional fraction and fineness designations are also shown. Electroplated jewelry items carrying at least 7 millionths of an inch (0.18 micrometers) of gold on significant surfaces may be labeled "electroplate." Plated thicknesses less than this may be marked "gold flashed" or "gold washed."

Gold was produced in the southern Appalachian region as early as 1792 and perhaps as early as 1775 in southern California. The discovery of gold at Sutter's Mill in California sparked the gold rush of 1849-50, and hundreds of mining camps sprang to life as new deposits were discovered. Gold production increased rapidly. Deposits in the Mother Lode and Grass Valley districts in California and the Comstock Lode in Nevada were discovered during the 1860's, and the Cripple Creek deposits in Colorado began to produce gold in 1892. By 1905 the Tonopah and Goldfield deposits in Nevada and the Alaskan placer deposits had been discovered, and United States gold production for the first time exceeded 4 million troy ounces a year--a level maintained until 1917.

During World War I and for some years thereafter, the annual production declined to about 2 million ounces. When the price of gold was raised from $20.67 to $35 an ounce in 1934, production increased rapidly and again exceeded the 4-million-ounce level in 1937. Shortly after the start of World War II, gold mines were closed by the War Production Board and not permitted to reopen until 1945.

From the end of World War II through 1983, domestic mine production of gold did not exceed 2 million ounces annually. Since 1985, annual production has risen by 1 million to 1.5 million ounces every year. By the end of 1989, the cumulative output from deposits in the United States since 1792 reached 363 million ounces.

Consumption of gold in the United States ranged from about 6 million to more than 7 million troy ounces per year from 1969 to 1973, and from about 4 million to 5 million troy ounces per year from 1974 to 1979, whereas during the 1970's annual gold production from domestic mines ranged from about 1 million to 1.75 million troy ounces. Since 1980 consumption of gold has been nearly constant at between 3 and 3.5 million troy ounces per year. Mine production has increased at a quickening pace since 1980, reaching about 9 million troy ounces per year in 1990, and exceeding consumption since 1986. Prior to 1986, the balance of supply was obtained from secondary (scrap) sources and imports. Total world production of gold is estimated to be about 3.4 billion troy ounces, of which more than two-thirds was mined in the past 50 years. About 45 percent of the world's total gold production has been from the Witwatersrand district in South Africa.

The largest gold mine in the United States is the Homestake mine at Lead, South Dakota. This mine, which is 8,000 feet deep, has accounted for almost 10 percent of total United States gold production since it opened in 1876. It has combined production and reserves of about 40 million troy ounces.

Article by:
Harold Kirkemo, William L. Newman, and Roger P. Ashley

 

by Harold Kirkemo, William L. Newman, and Roger P. Ashley