GoldAdapted by Harvey Utech from an article by Dr Bill Birch, Senior Curator, Geosciences, Mu-seum Victoria, Australia and an article on the World Gold Council’s Website (www.gold.org).

German translations of stems added by Utech.

Gold has had an inestimable (unschätzbar) effect on human history. It has been crafted (von Hand fertigen), mined (abbauen), worshipped (verehren), plundered, fought over (sich streiten um) and traded (Handel treiben) for thousands of years. Today, the search for gold is as eager (erwartungsvoll) as ever, despite the vast stocks stored away in underground bunkers. So why has gold held this fascination (Begeisterung) for humanity?

PropertiesIts initial attraction (Anreiz) is its color, an eye-catching and characteristic bright yellow with a soft metallic glint (Flackern). Gold’s pleasant ‘feel’, a combination of its density (19.3 grams per cubic centimeter when pure) and coldness, cannot be duplicated by any other metal. Furthermore, gold can be hammered into very thin sheets or leaves, drawn (ziehen) into wire, cast (gießen), carved (graviert), polished, heated without tarnishing (Anlaufen) and easily combined (alloyed) with other metals.

Gold also conducts (leiten) heat and electricity, reflects (spiegeln) light and is untouched by nearly all acids, a property which led alchemists to christen (taufen) it the noble metal. This combination of properties makes gold very stable in its natural metallic form, and also gives it many uses in electron-ics, ornaments, jewelry and advanced technology.

The color of gold is directly related to its purity. Crystallised gold and silver have the same atomic structure and their atoms are nearly identical in size, so that natural alloys of gold and silver are common. Pure, or 24-carat gold, is the brightest yellow, but as the amount of silver increases, the color be-comes paler (blasser). Trace amounts of copper, iron and palladium can also substitute in gold. Man-made alloys of gold with rhodium, iridium or palla-dium, intended to give gold greater hardness when used in jewelry, have been given names such as ‘white gold’. The carat scale is commonly used in jewelry, while in mining (Bergbauindustrie), an alternative scale uses ‘fine-ness’ of gold, where a figure of 1000 corresponds to pure or 24-carat gold.

Finding GoldBecause gold is very stable over a wide range (Reichweite) of conditions, it is very widespread in the earth’s crust. While its overall concentration is very low (about 5 milligrams per ton of rock), rich concentrations of gold, forming ore deposits (Erzlagerstätte), are known throughout the world. The well-known saying amongst prospectors (Goldsucher) that "gold is where you find it" suggests its occurrence is unpredictable (unvoraussagbar), but it is now known that certain geological environments favor (vorziehen) gold’s formation.

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A popular misconception (Fehlannahme) is that natural gold has cooled from a molten state. In fact, gold is transported though the Earth’s crust dissolved (gelöst) in warm to hot salty water. These fluids are generated in huge volumes deep in the Earth’s crust as water-bearing minerals dehydrate during metamorphism. Any gold present in the rocks being heated and squeezed is sweated out (ausfällen) and goes into solution as complex ions. In this form, dissolved gold, along with other elements such as silicon, iron and sulphur, migrates wherever fractures (Brüche) in the rocks allow the fluids to pass. This direction is generally upwards, to cooler regions at lower pressures nearer the Earth’s surface. Under these conditions, the gold even-tually becomes insoluble (unlöslich) and begins to crystallize, most often enveloped (verhüllt) by masses of white silicon dioxide, known as quartz. This association of gold and quartz forms one of the most common types of "primary gold deposits".

Veins (Ader) of gold-bearing quartz can occur in many types of rock, for ex-ample around granites, in volcanic rocks or in regions of black slate (Schiefer), but in most cases these host rocks are not the immediate source of the gold.

As chemical weathering (Bewitterung) and erosion gradually break down the host rocks and lower the land surface, the quartz and gold veins (Gang) are eventually exposed to the atmosphere. The veins provide far more resis-tance to chemical attack than the surrounding rocks, so that mechanical weathering is required to fragment the quartz, thereby releasing [befreien] the gold. Because they are relatively heavy, particles of gold are more diffi-cult to move and so become naturally concentrated in the soil or in adjacent gullies (Rinne) or stream beds. These concentrations have yielded incredible riches on some goldfields, such as those in California where gold nuggets were found in stream beds, leading to the California Gold Rush.

Demand and supply Demand (Bedarf) for gold is widely spread around the world. East Asia, the Indian sub-continent and the Middle East accounted for 70% of world de-mand in 2005. 53% of demand is attributable to just five countries - India, Italy, Turkey, USA and China, each market driven by a different set of socio-economic and cultural factors. Rapid demographic and other socioeconomic changes in many of the key consuming nations are also likely to produce new patterns (Vorbilder) of demand.

Jewelry DemandJewelry consistently (regelmäßig) accounts for around three-quarters of gold demand. In the 12 months to December 2006, this amounted to US$44 billion, making jewelry one of the world's largest categories of consumer goods. In terms of retail (Einzelhandel) value, the USA is the largest market for gold jewelry, whereas India is the largest consumer in volume terms (in Bezug auf), accounting for 22% of demand in 2006.

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Indian gold demand is supported by cultural and religious traditions which are not directly linked to global economic trends.

Generally, jewelry demand is driven by a combination of affordability (Bezahlbarkeit) and desirability (Erwünschtheit) by consumers, and tends to rise during periods of price stability or gradually rising prices, and de-clines in periods of price volatility. A steadily rising price reinforces (ver-stärken) the inherent value of gold jewelry, which is an intrinsic (dazu gehörend) part of its desirability. Jewelry consumption in the developing markets has been expanding (sich ausbreiten) rapidly in recent years fol-lowing a period of sustained decline, but several countries, including China, still offer considerable potential for future growth in demand.

Investment demandBecause a significant (maßgeblich) portion of investment demand is trans-acted in the over-the-counter (über den Schalter) market, it is not easily measurable. However, there is no doubt that identifiable investment demand in gold has increased considerably in recent years. Since 2003, investment has represented the strongest source of growth in demand, with a year-on-year increase in value of 45% by the end of 2006, and growth over the past five years of around 300%. Investment attracted net inflows of approxi-mately $13 billion in 2006.

There are a wide range of reasons and motivations for people and institu-tions seeking to invest in gold. And, clearly, a positive price outlook (Per-spektive), underpinned (stützen) by expectations that the growth in de-mand for the precious metal will continue to outstrip (überholen) that of supply, provides a solid rationale for investment. Of the other key drivers of investment demand, one common thread can be identified: all are rooted (sich bewurzeln) in gold's abilities to insure against uncertainty and insta-bility and protect against risk.

The growth in investment demand has been mirrored (spiegeln) by corre-sponding developments in ways to invest and there are now a wide variety of investment products to suit both the private and institutional investor.

Industrial demandIndustrial and dental uses account for around 12% of gold demand (an an-nual average of over 400 tons from 2002 to 2006 inclusive). Gold's high thermal and electrical conductivity, and its outstanding resistance to corro-sion, explain why over half of all industrial demand arises from its use in electrical components. Gold's use in medical applications has a long history and today, various biomedical applications make use of its bio-compatibility, resistance to bacterial colonization (Besiedlung) and corrosion, and other attributes (Eigenschaft). Recent research has uncovered a number of new practical uses for gold, including its use as a catalyst in fuel cells, chemical processing and controlling pollution (Verschmutzung). The potential to use nano-particles of gold in advanced electronics, glazing (Verglasen) coatings (Verkleidung), and cancer treatments are all exciting areas of scientific re-search.

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Mine productionGold is produced from mines on every continent except Antarctica, where mining is forbidden (verboten). Operations range from the tiny (winzig) to the enormous. According to recent figures, there are around 400 operating gold mines worldwide. Today, the overall level of global mine production is relatively stable, averaging (im Durchschnitt betragen) approximately 2,550 tons per year over the last five years. New mines that are being devel-oped are serving to replace current production, rather than to cause any significant expansion in the global total.

The comparatively long lead times (Vorbereitungszeit) in gold production, with new mines often taking up to 10 years to come on stream (in Fluss bringen), mean mining output is relatively inelastic (unelastisch) and un-able to react quickly to a change in price outlook (Aussicht). The incentives (Anreiz) promised by a sustained (ununterbrochen) price rally (Markter-holung), as experienced by gold over the last half decade, are not therefore easily or rapidly translated into increased production.

ScrapHowever, although gold mine production is relatively inelastic, recycled gold (or scrap) insures there is easily traded supply when needed, and this helps to stabilize the gold price. The value of gold means that it is economically vi-able (realizierbar) to recover (wiedergewinnen) it from most of its uses, where it is capable of being melted down, re-refined and reused. Between 2001 and 2005, recycled gold contributed an average 23% to annual supply flows.

Central banksCentral banks and supranational organizations (such as the International Monetary Fund) currently hold just over one-fifth of global above-ground stocks of gold as reserve assets (amounting to around 31,000 tons, dis-persed (verteilt) across 110 organizations). On average, governments hold around 10% of their official reserves as gold, although the proportion varies country-by-country.

Although a number of central banks have increased their gold reserves in the past decade, the sector as a whole has been a net seller (Verkäufer) since 1989, contributing an average of 562 tons to annual supply flows in 2001-2005. Since 1999, the bulk of these sales have been regulated by the Central Bank Gold Agreement/CBGA (which stabilizes sales from 15 of the world's biggest holders of gold). Net central bank sales amounted to just 319 tons in 2006, less than half the 659 tons recorded for 2005.

Gold productionThe process of producing gold can be divided into six main phases: finding the ore (Erz) body; creating access (Zugriff) to the ore body; removing the ore by mining or breaking the ore body; transporting the broken material from the mining face to the plants for processing; processing; and refining. This basic process applies to both underground and surface operations.

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The world's principal gold refineries are based near major mining centers, or at major precious metals processing centers worldwide. In terms of capacity, the largest is the Rand Refinery in Germiston, South Africa. In terms of out-put, the largest is the Johnson Matthey refinery in Salt Lake City, US.

Rather than buying the gold and then selling it onto the market later, the re-finer typically takes a fee from the miner. Once refined, the bullion [un-gemünztes Edelmetall] bars (with a purity of 99.5% or higher) are sold to bullion dealers who, in turn, trade with jewelry or electronics manufacturers or investors. The role of the bullion market at the heart of the supply-demand cycle - instead of large bilateral (zweiseitig) contracts between miner and fabricator – facilitates (begünstigen) the free flow of metal and underpins (untermauern) the free market mechanism.

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