From Medicine to Outer Space: The Many Industrial Uses of Gold and Their Effect on the Gold Price

I am bringing my Edinburgh Fringe “lecture with funny bits” about the history of mining to London on October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. The Edinburgh link is here. And the London link is here.

Let’s start with an overview of gold demand as it currently stands.

Never mind central banks, investment banks, or private investors—almost 50% of annual gold demand comes from the jewellery industry. It is, by some margin, the single largely buyer of gold. Another 23% is investment demand, and 21%—last year at least—came from central banks. Just 6% of demand is industrial (excluding jewellery, of course).

Jewellery, investment, and central bank demand have all been increasing in recent years. However, a change in macroeconomic circumstances could easily mean, for example, that central banks become net sellers. It's not like it hasn't happened before. But, while de-dollarisation remains a growing theme, I do not see that as likely for several years at least. Similarly, investment demand could easily shrink. Jewellery demand is more constant, and it increases when people feel rich and decreases when they don’t.

Gold’s main use has always been and will always be to store and display wealth—in other words, investment and jewellery. Technological demand is rather at the margin, but might we see demand growth there? Let’s investigate.

Interestingly, one huge potential increase in demand will come, ironically perhaps since that is where gold came from, at the final frontier in outer space.

At the Final Frontier - Also On Your Phone

Both silver and copper are better conductors of electricity than gold, but gold is more resistant to corrosion and oxidation. Therefore, it finds considerable use in electronics as a coating, especially where long-term stability is important. It is used to cover connectors, switches, and relay contacts; in printed circuit boards, microprocessors, and memory chips. This resistance means it finds considerable use in both aerospace and outer space, where it is used to coat satellite components and spacecraft.

It can reflect infrared radiation and protect craft from overheating—especially important in the wild temperature fluctuations of outer space. It is also used in the heat shields which protect sensitive equipment from high temperatures during re-entry into Earth's atmosphere.

The umbilical cord that binds an astronaut to their spacecraft is plated with gold. The visors of astronaut helmets are plated with gold to protect their eyes from harmful ultraviolet radiation. The MOXIE (Mars Oxygen In-Situ Resource Utilization Experiment) instrument, which forms part of NASA’s Mars exploration programme, is plated with gold. Its purpose is to create oxygen from carbon dioxide, effectively replicating the role of plants on Earth, so that a human mission to Mars can one day take place.

Ultimately, gold’s permanence is the fundamental reason for its use. You need durable materials. When you send a spacecraft to outer space, you can’t repair it.

This usage is not yet significant enough to radically alter gold demand, but that could change, and quite dramatically so, as space exploration increases.

At the 2022 Olympics in Tokyo, the metals to make the medals came from a recycling initiative. The Japanese handed in nearly 80,000 tonnes of electrical gadgets, including laptops, digital cameras, gaming devices and 6 million phones. The appliances yielded 32kg/1,000 ounces of gold and 3,500 kg/113,000 ounces of silver. There is, I learn, about eighty times as much gold in one tonne of cellphones than there is a typical tonne of rock at a gold mine. Increased high tech means increased gold demand, but perhaps not enough to effect the price.

Optics and Other High Tech Uses

Gold's reflective properties, combined with its stability, mean it finds use in optics—in lenses and mirrors, especially space telescopes, to reflect infrared light. Gold plates the mirrors of the celebrated James Webb telescope, the largest optical telescope in space, to optimise the mirrors’ function, allowing it to view objects too old, distant, or faint for the Hubble Space Telescope. For example, the first stars, the formation of the first galaxies, and the detailed atmospheric characterization of potentially habitable exoplanets.

There is a Canadian company, Totenpass, which has been developing some interesting gold tech, also related to gold’s longevity: “a permanent digital storage drive constructed from solid gold that requires no energy and has no movable parts. Digital data is written onto the drive by way of a proprietary light-diffraction process which imprints images, documents, and other files that can be stored as either human readable without the aid of computers or machine-readable with the employment of a smartphone. This technology allows for the permanent storage of precious digital data, thereby eliminating any future dependence on the internet and the vast amounts of energy required presently to store content. By consequence, this technology will empower both individuals and corporations to decentralize, preserve and fully control their precious digital data once and forever.” Here, it seems, is a very modern application for the extraordinary permanence of gold.

If you are interested in buying gold, check out my recent report. I have a feeling it is going to come in very handy.

My recommended bullion dealer is the Pure Gold Company.

Gold is being used increasingly in nanotechnology. Gold nanoparticles are used in photonics (the science of light waves), especially in the development of light-based technologies for imaging and sensors. Gold's inertness makes it an excellent material for nanoparticles used as catalysts in various chemical reactions. For instance, gold nanoparticles are employed in the oxidation of carbon monoxide in air purification systems. Researchers are also exploring gold's potential as a catalyst to improve renewable energy efficiency and solar cells. Again, its conductivity and resistance to oxidation make it ideal for nanoscale electronic components.

Gold is like the sun: it can kill but it can cure

As for the medical industry, gold and healing have a long, intertwined history. Gold was associated with the sun gods who bestowed health and vitality, or “helped the body produce vitamin D,” as we might put it today. (More and more health benefits from vitamin D are being discovered today, especially bone health and immune function). The Egyptian God of the Sun, Ra, the giver of life, was made of gold. Gold was the flesh of the gods. It symbolised health as well as eternal life. Apollo, the Greek God of the Sun, was often depicted with gold, and he was also the God of Healing, and father of Asclepius, the god of medicine.

Gold nanoparticles are used today in medical diagnostics and treatments, including targeted drug delivery and cancer therapy, because they can be easily detected and manipulated. Additionally, gold's biocompatibility ensures it does not provoke an immune response, making it suitable for use in various biomedical applications. In 2013, researchers found that gold nanoparticles reduced the ability of HIV to reproduce and infect new cells.

It is becoming one of the weapons in the battle against malaria. Of the hundreds of millions of malaria tests sold each year, many contain gold: gold nanoparticles bind with specific malaria antigens, which help quick and accurate detection of the disease. The test results can be ready in 15 minutes.

Golden Buildings

Gold nanoparticles also find use in occasional building materials to enhance strength and thermal regulation. Coating glass with gold can reflect the sun's heat in summer while bouncing internal heat back into rooms in winter, resulting in substantial energy savings. It is corrosion resistant too, which increases longevity.

But the main reason for its use in building is opulence. On the facades of buildings, gold will give your building unique and striking appeal. Toronto’s Royal Bank Plaza, the Grand Lisboa hotel and casino in Macau, and Al Yaqoub Tower in Dubai are all notable examples, as is Trump International Hotel and Tower in Las Vegas: its gleaming gold-tinted glass makes it stand out even on the Las Vegas Strip. The golden domed St. Michael’s Cathedral in Kiev is also a stunning example. To use gold on a roof or facade is extravagant but perhaps not as extravagant as you might think: an ounce of gold will cover up to 1,000 square feet (90 square metres) in gold plate and it brings substantial savings. Internally, gold also finds occasional decorative use: gilded furniture, fixtures and wall decorations, such as seen at the Burj Al Arab hotel in Dubai, which makes extensive use of gold leaf in its interior design.

Conclusion

All in all, exciting stuff, but none of this demand will be enough to significantly affect the price of gold. In most cases, we are talking about plate and nanoparticles. If every roof were to be coated in gold as part of some green energy initiative ordered by the government, or space travel were suddenly to get extremely popular, then I might change my mind, but neither scenario is imminent.

The main source of gold demand will be what demand has always been: as a store and display of value. Jewellery and investment, in other words.

Until next time,

Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.

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