Categories: Stock Market
Topics: Inflation Stocks / Precious Metals

Origins of Gold

Origins of Gold

When we ponder gold… it’s almost always from a “stock speculation,” “safe haven,” or “mining” perspective.

But what about the yellow metal’s cosmic origins… 

How often do we stop and think about the fact that ALL of the gold (“Au”) on Earth — as well as ALL of the Earth’s heaviest metals — were delivered to our planet during its formation?

In order to create heavy elements such as gold, you need temperatures that are beyond extreme.

We're talking MILLIONS of degrees…

…much hotter than anything that can be sustainably replicated on Earth today whether through natural or manmade forces (although recent advancements in nuclear fusion technology by England’s JET and France’s ITER programs — plus competing firms in the US and Canada funded by the likes of Bill Gates and Jeff Bezos — could literally change everything in the coming decades!).

In general terms, the heavier the element, the hotter the temperature required to make it.

And where in the universe do we find such extreme temperatures? In our Earth’s core?

Not a chance!

Our planet’s inner core only reaches about 5,200 degrees Celsius [9,392° Fahrenheit] — a far cry from the millions of degrees required for gold and heavy metals creation.

So Where Did These Critical Metals Come From?

We can look to a couple of cosmic scenarios where heavy metals creation is thought possible.

One being the now universally accepted Big Bang model — occurring some 13.8 billion years ago and marking the beginning of the formation of our universe.

Another is in the core of neutron stars, which are formed at the end of supernova explosions.

Neutron stars have about 10X the mass of our sun and often come in pairs called binary stars (see above).

Now, you’re probably picturing a pair of very large suns…  yet, that’s not the case at all.

Neutron stars are extraordinarily dense… picture a star that significantly outweighs our sun yet is only about the size of Manhattan!

Scientists theorize that all of Earth’s heavier elements were created during these powerful events — which produce fusion (the combining of atoms) on an unimaginable scale.

Thus, a great number of the elements we cherish and rely upon today such as gold, silver, platinum, nickel, copper, and uranium were in-the-mix so to speak and were dispersed across the cosmos during these game-changing events.

Naturally, comets and asteroids continued to bombard our planet for some 4.5 billion years as a sort of perpetual delivery service of these and other heavy elements.

When you look at the periodic table of elements, it’s no wonder that the largest group of elements are the metals. And in that group is the metal we cherish most — GOLD!

Gold Never Rusts… Tarnishes… or Weathers Away!

There’s nothing more beautiful than gold — nothing in the world. Its brilliant color captures the human eye like nothing else.

You just feel it when you see it!

Ancient civilizations placed a high value on the yellow metal before the concept of currency or money even existed. It's something people intrinsically knew had worth.

We feel that same intrinsic value today.

Scientifically speaking, gold has an extremely tightly-packed atomic structure as well as a strong positive charge. That means its outermost electrons are much less available for chemistry with other elements — making it the most non-reactive metal on Earth.

Or put another way… gold is a native element that only combines with a few other metals to form alloys. 

Hence...  gold lasts forever!

That’s why we’re able to appreciate gold masterpieces from ancient artisans. These priceless art pieces are as beautiful today as they were thousands of years ago… and will be thousands of years from today.

An Eternal Love Affair with the Yellow Metal  

The vast majority of the world’s gold is hoarded by individual savers (primarily gold coins) and governments (primarily gold bars) as a sort of nest egg or safe haven instrument.

I recently interviewed Van Simmons, partner and president of David Hall Rare Coins and cofounder of the PCGS — the go-to system for grading and authenticating coins globally.  

He says, “Coins are the supreme act of sovereignty sitting there saying, ‘We are our own free nation, making our own gold and silver coins.’ The first gold coin struck in the United States was made in 1795… the 1795 Small Eagle $5 gold piece. That's one of the reasons I like them; there’s just so much history attached to them!”

I wholeheartedly agree with Van. In fact, through his expertise and assistance, I’ve begun constructing my own rare coin and bullion portfolio. I plan on passing it onto my son so he can continue the wealth-building tradition… and perhaps he’ll pass it onto his kids one day.

On a global basis, there’s currently around 34,000 tonnes of gold in “official holdings” with the United States maintaining the number one spot at over 8,000 tonnes.

Today, most of the gold that is newly-mined or recycled is used in the manufacture of jewelry. And nearly 98% of the gold that has ever been mined remains available for trade, barter, recycling, etc.

More Than Just Beauty

From an industrial standpoint, gold can be stretched incredibly thin and is an excellent conductor of electricity, making it ideal for use in a variety of electrical devices — including mobile phones, GPS devices, laptops, and computers.

And because gold is an almost perfect reflector of infrared light — it has an array of advanced applications in the aerospace industry, including as a coating for astronauts’ helmet visors and as well for telescopes — including the James Webb Space Telescope — providing a near-perfect view of the infrared invisible universe.

Gold is a Rare Element

For all its infinite beauty… gold is also very rare. 

Each year, global mining adds just 2,500 to 3,000 tonnes of gold to the overall above-ground stockpile. For comparison, global silver production chimes in at about 25,000 tonnes and copper at about 18 million tonnes! 

The best estimate for the total amount of gold that has been mined throughout history is around 200,000 tonnes with about two-thirds of that occurring after 1950.

If we could somehow gather every scrap of gold that’s ever been mined, it would fit neatly inside a cube measuring just 21 meters on each side.

Or to picture it another way: Those ~200,000 tonnes would fill only about a third of the Washington Monument!

Gold in Geology

In geology, gold is concentrated one-thousand or more times from its usual crustal abundance of three parts per billion into economic mineral deposits by way of complex geological processes.

These include temperature and pressure changes and can be driven by structural and tectonic events, magmatic, volcanic, and hydrothermal processes, and/or surficial weathering.

Geologists, prospectors, and miners alike spend lifetimes scouring creek beds, banging outcroppings with a hammer, and drilling into the Earth’s surface in pursuit of gold riches.

The world’s largest gold deposit is the Grasberg Gold/Copper Mine of Papua, Indonesia, with an estimated $40 billion in gold ore reserves. The mine is a joint venture between majors Freeport-McMoRan and Rio Tinto.

The US Geological Survey estimates that, of the world’s known gold, about 63,000 tonnes are still in the ground, compared with the roughly 200,000 tonnes that have already been mined.

North American gold mining companies are currently seeking ways to mitigate the environmental impact of mining operations by replacing cyanide (commonly used in the gold leaching process) with non-toxic chemicals such as thiosulfate. 

Significant advancements are also being made in both the reduction and reprocessing of above ground mine-waste or “tailings,” which can harm ecosystems as elevated concentrations of metal-rich sulfides are leached into soils and groundwater through the natural forces of erosion.

Those important efforts are not only a welcome change for an industry with, let’s face it,  a less-than-stellar environmental track record… but are also leading to a New Gold Rush of sorts in places like California, Arizona, and Idaho.   

And by no means do you need to be a professional mining engineer or geologist — or an expert of any kind for that matter — to strike it rich with gold.

Take for example the Welcome Stranger nugget. Discovered in Victoria, Australia, in 1869 by John Deason and Richard Oates… and tipping the scales at a whopping 78 kg (175 lbs)... it’s the largest gold nugget ever found.

More recently — in fact, right about the same time COVID hit — a couple of intrepid gold hunters in that same Australian state used metal detectors and shovels to unearth two softball-size gold nuggets worth a cool quarter-million dollars.

A nice payday indeed… but also the thrill of a lifetime… and what an amazing story to be able to share with the grandkids!

There’s lots more gold yet to be found for those willing to roll up their sleeves. And having grown up in a mining family, I can certainly attest to that… but that’s a story for another day!

For all its infinite beauty, gold will continue to capture the imagination of humankind for as long as we’re around!

So next time you find yourself thinking about gold as a speculation or through the lens of a precious metals exploration company… take a moment to reflect on the yellow metal’s incredible journey from outer space to our home planet.

There’s nothing more exciting than discovering Earth’s most cherished metal.

I guess that’s why they call it gold fever!

Yours in profits,

Mike Fagan, Editor
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