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Casual observers of gold typically fall prey to the simplistic notion that fear is the primary motive behind decisions to acquire gold exposure. The only times I have observed fear among gold investors have been during the periodic corrections that test their confidence in the long-term bull market trend, tempting them to sell into weakness. Because the early 2012 rally that preceded the "Leap-Year Gold Massacre" was so short-lived, following as it did a prolonged period of weakness in the second half of 2011, the latest breakdown is a source of understandable frustration for gold investors. The related mining equities have been underperforming for quite some time, and lately it seems they've been producing more disappointment than gold. Major asset writedowns have hammered Kinross Gold (NYSE: KGC ) and Newmont Mining (NYSE: NEM ) , and severe cost inflation has challenged even the large-scale development projects at Barrick Gold (NYSE: ABX ) . More recently, the charts have turned uglier still, opening the possibility that gold and related equities could be in for a bit more near-term weakness before staging another reversal. Furthermore, as the financial world ebbs and flows with each change in the perceived likelihood of additional quantitative easing by the Federal Reserve, some gold investors will undoubtedly throw in the towel. Gold falls prey to unfounded pessimism. Courage and conviction are required to stand strong with gold exposure in the face of dramatic declarations like letterwriter Dennis Gartman's recent assertion that the gold bull market ended all the way back in August of 2011. Interestingly, in the days following the Feb. 29 collapse in gold that so impaired the near-term technical landscape, Gartman himself pondered "the prospects that something manipulative and perhaps even nefarious took place Wednesday in the gold market." John Embry, chief investment strategist at Sprott Asset Management, slammed Gartman's bearish call in an interview with King World News, stating: "Given Dennis's unbelievably inept record at calling the gold price, in both directions, I regard this event as wildly bullish." Of course, I am convinced that Gartman's grossly premature call will suffer the same fate as Nouriel Roubini's claim in 2009 that "those people who delude themselves that gold can go to $1,500 or $2,000 are just talking nonsense." At the time, I took Roubini to task for what I considered his "worst call ever" and encouraged my readers to instead heed the bullish outlook offered by Jim Rogers. History has already settled that score, but the exercise provides a timely reminder for investors to reassess their resolve in response to the busted sentiment, intimidating headlines, and unfriendly charts that periodically test the mettle of long-term gold investors. With much attention heaped upon the bearish perspectives of late, I will present below a set of opinions that underscore the resiliently bullish long-term outlook for gold.
Commodity guru Jim Rogers remains resolute in his bullish long-term outlook for gold and silver, indicating last week that he intends to buy more on any further price weakness. While anticipating some additional near-term decline in prices, Rogers approaches the pullback with the opportunistic perspective that I consider paramount to successful navigation of bull markets as inherently volatile as those for gold and silver. According to newsletter writer Richard Russell, China is operating under a similar strategy. Russell referred last week to a "Chinese put" under the gold price, adding: "China is moving in to scoop up gold on any gold weakness. At the low 1600s and below 1600 -- it's 'enter the dragon.'" Economist Marc Faber has identified two "huge bubbles" -- one in U.S. public spending and government debt, and another in "the wealth and the income of the super-wealthy" -- but he vehemently resists the notion that gold is a bubble. Faber appears utterly unfazed by the recent weakness in gold: For the last 40 years in my business I've seen people always lose money when they put too much money into something and then it goes down. They panic and sell, or they have a margin call to sell -- and lose money. I own gold. It's my biggest position in my life. The possibility of the gold price going down doesn't disturb me. Every bull market has corrections. And then there are the banks, which are finally adapting to the new reality of gold after failing to prepare their clients for the initial stages of the monetary metal's ascent. Morgan Stanley reiterated its bullish outlook, stating: "We believe that the recent weakness in gold is a good entry point as some elements of the recent selling pressure appear to be at odds with the FOMC's still-dovish position." Standard Bank expects an average gold price of $1,790 for 2012, which would imply substantially greater strength during the second half of the year than we have seen thus far. Japanese firm Nomura characterized its price forecast for $1,791 in 2012 and $2,063 in 2013 as being "in line with consensus estimates." BNP Paribas is substantially more bullish, targeting average prices of $1,850 for 2012 and $2,225 for 2013. Goldman Sachs recently issued a buy recommendation for gold with a six-month price target of $1,840 per ounce. Deep value in quality miners is a safe haven while awaiting QE3 For many gold investors, the doubt that periodically sets in revolves around dynamic projections regarding the likelihood that the Federal Reserve and other key central banks will engage in further accommodative policy intervention through some combination of liquidity injections, zero-bound interest rates, quantitative easing, etc. That's a topic for another day, but I think PIMCO cofounder Bill Gross summed it up nicely last week when he tweeted: "Central banks are where bad bonds go to die. Without QE, the financial markets & then the economy will falter."
Because I am as convinced today as I have ever been that gold will trade to $2,000 per ounce and well beyond, and given the extreme undervaluation I perceive among a broad swath of the related mining equities, I remain steadfastly invested in the space. The standout bargains are frankly too numerous to mention, but Primero Mining (NYSE: PPP ) remains a strong favorite of mine. Of the larger producers, Goldcorp (NYSE: GG ) is the first coin I would stash in my pot of gold. I have issued bullish CAPScalls for both stocks and selected them as top picks within my Motley Fool CAPS portfolio. I am 100% unshaken by this latest corrective phase, and I believe quality gold-mining equities at current valuations will someday be seen as one of the great market opportunities of our era. Looking for more ideas? Download The Motley Fool's special free report, "The Tiny Gold Stock Digging Up Massive Profits." Our analysts have uncovered a little-known gold miner that we believe is poised for greatness. Find out which company it is and why we strongly believe in its future -- for free!
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Don’t give up on gold just yet
March 12, 2012, 4:00 PM
Gold appears to have lost its steam, with prices trading slightly lower for the month so far, after a disappointing 1.7% loss in February, but Dillon Gage Metals expects prices to reach new heights later this year. Gold prices weakened Monday. April gold futures GCJ2 +0.15% $1,699.80, down $11.70, Monday. closed at
A strengthening safety net for Europe’s debt crisis and improving economic conditions outside Europe could dampen investor’s interest in acquiring gold for now, said Terry Hanlon, president of Dillon Gage Metals, in a press release Monday. But other factors are supportive for the yellow metal, he said, adding that geopolitical conditions, most notably tensions in the Middle East, will continue to buoy gold and crude oil prices this year. Hanlon highlighted data showing strong global gold demand last year and rising purchases from central banks.
550 to $1.1% in 2011.895 an ounce. which struck a short time after I increased my precious metal allocation from somewhere around 40% to roughly 70%. as it was in recent years. I watched with unbroken confidence in the long-term bull market as that brutal correction erased more than half my portfolio's market value and sent my CAPS score careening from the top to the bottom of the pack.067 metric tons in 2011 to reach a record annual value for gold demand of $205. I have no regrets for having essentially depleted my cash reserves here. “I look for gold to advance in 2012 and to take out its 2011 peak at $1. I am here to remind Fools that the purpose of a corrective pause in a long-term bull market is to periodically shake-out the weaker hands. But since every stock purchase of late has been accompanied by a feeling of deep satisfaction at the values thus obtained. and the thoroughly distressed valuations pervading the related production and exploration entities is enough to try the patience of even the most seasoned market participants. “I expect the 2012 high to be made in the latter part of the year.51 per share without having the means to average down into my position. I learned a different lesson during that chapter. The current correction in gold and silver has put all these lessons into practice. the WGC reported in mid-February. though the brief nature of the early-year rally only permitted a modest accumulation of cash reserves. but ultimately I ended up buying back some of those positions at higher prices as my ongoing research and developing understanding of the fundamental outlook enhanced my confidence in the inevitability of the next major breakout. and as long-term investors we never want to play that role. with purchases by central banks growing to nearly 440 metric tons last year. and they have mostly been reinvested at this juncture. I recall feeling an odd sense of relief when I sold some positions into weakness to place a limit on my losses.Global gold demand reached 4. My longstanding readers will recall my discussions of the 2006 gold correction. The lessons learned through that experience served me well during the 2008 crisis and associated collapse of the precious metals and their equities.” It's been a rough road for gold and silver investors lately. which was to always build a cash position into strength so that I would never again be forced to watch a stock like Silver Wheaton fall to $2. Central banks continued to be net buyers of gold. and would only get stronger if gold were to test the $1. according to recent statistics from the World Gold Council. Because of the technical 4 .600 range (which I am not saying will happen).” Hanlon said.100 an ounce then.650.000 or $2.5 billion — 29% above the 2010 value. Physical buying is very strong beneath $1. from 77 metric tons in 2010 and gold used in global electronic also rose 1. Gold may be able to reach a record $2.
None of these measures will solve the underlying structural deficiencies infecting the global financial system. to offer an encouraging word of reassurance during a period of weakness that has rattled the confidence of many gold and silver investors. furthermore. Additional measures of an unappetizing scale will likewise be forced upon the European continent. and because that is likely to occur in the midst of a meaningful breakout in the underlying metal prices.550 to $1.aspx While a few good reasons exist behind the dramatic underperformance of the precious metal equities to date. savvy market participants. and to understand instead just how inevitable further easing remains given the prevailing circumstances. the corresponding appreciation in the quality shares out of such a deeply impaired state is likely to yield gains on a scale that seems difficult to contemplate while we remain mired here in relative weakness. but nothing that higher prices can't alleviate. continue to 5 . my community of fellow gold and silver investors here on CAPS. I do not consider anything beneath $1. Until we find long-side commitment on a scale to match the price-crippling shorts.fool. I wrote the following article for you. including sovereign banks in China and elsewhere. The time will come when gold and silver do begin to exhibit characteristics of a maturing bull market through the increased participation of investors. will feedback into the supply equation as mine supply will not be able to meet growing investment demand without substantial investment capital behind every tier of the equity space. Meanwhile.damage imparted by the recent break below $1. but rather will only buy the central banks some time.500 even remotely possible.com/investing/general/2012/04/11/dont-give-up-on-gold. we will not have even reached the maturing stages of a secular bull market.680 in short order does indeed keep the $1.650. I encourage you to see straight through the noise portraying reluctance by the FED to engage in further QE. Rising costs are a problem. The prolonged nature of this impaired state. any failure to recapture $1. The gold and silver equities have enjoyed a few brief moments of remarkable strength within an otherwise dismal trajectory. for the most part I believe that prevailing valuations are a result of unjustified indifference toward the industry by financial markets that have still not internalized the full scope and longevity of the ongoing bull market trend. but a longstanding indifference that points to the opposite extreme. http://www. and I consider it far more likely than not that the $1. We have not only a complete absence of speculative froth in the equities. I intend to write a follow-up piece specifically on that point. the more noteworthy speculative froth in the paper gold and silver markets occurs on the short side. In the meantime.600 level will hold.600 range within the realm of possibility. and in no way does that experience correspond to the end-stages of bubblemania that some bears wrongly perceive in gold. but rest assured that further easing will come from the FED.
don't give up on gold. That cash position makes all the difference between mere frustration and despair.offload physical supply while the high-frequency circus continues with its paper games. please. I stand with you. $2. How to Purify Gold Purifying gold Before gold is sold on the market. as that memory will serve you well the next time gold enters another inevitable corrective pause.000 remains an absurdly conservative price target for gold. It needs to be done under the right circumstances and with the utmost care in safety precautions. It is not recommended to try this process unless you have experience working with harmful chemicals. 6 . When we do finally get a breakout. but one that I retain nonetheless until such time as we strike through it. it has to go through a purification process. and in fact for some time beyond. Remember the feelings you feel in the midst of this correction. Don't let up on the discipline that keeps you intent on permitting only the most attractive and most carefully vetted companies into your portfolios. Until then. This process is quite complex and dangerous. remember to raise some cash into strength in preparation for the next pause. So stand strong with gold and silver.
o 2 Mix your acid beaker with your ore beaker and simmer. o 3 Filter the solution. In your second beaker. such as lime juice. you must first extract any silver that may be present in the ore. mix three parts hydrochloric acid to one part nitric acid. Do not dispose of the solid without first treating it with a solution. to neutralize it. o 1 Prepare your beakers. Place your gold ore into one of the beakers. Slowly drop small amounts of the un-iodized salt into the mixture. o 4 Check for silver. This will cause the gold to continue to add the sodium until the gold stops moving to the 7 . Before you can extract the gold. as both are quite toxic and can be dangerous. as there is liquid in the beaker. You can then use a coffee filter to strain out the liquid from the silver particles. Use a strainer to filter off any of the solid that may be left from the boiling process.Instructions 1. Be sure to keep the liquid that you have strained off because it still will contain the gold. Once you have combined your two beakers. After you have strained out the solid. Be very careful when mixing your acids. o 5 Check for gold. Be sure that you are also wearing protective eye wear as well as gloves that can hold up against acid. simmer the mixture on a hot plate until all of the nitric acid has been boiled off. This should cause little white particles of silver chloride to drop to the bottom of the container. Set the silver aside. If most of the liquid evaporates before the nitric acid is gone. Be careful to do this quite slowly and carefully. add equal amounts of distilled water. Put the remaining acid mixture back into a beaker. Slowly add sodium sulfite to the mixture. you can add a small amount of hydrochloric acid to keep the ore covered in liquid.
Take every precaution possible and do not attempt this process unless you are an experienced chemist or goldsmith. Be sure to have everything at hand and that you have a large enough area to work. Pour into a mold and let it cool. put the filter into a clay crucible and set the filter on fire to get rid of it. Mixing them wrong or inhaling their fumes will not only hurt you.bottom of the beaker. Now that you have your separated gold. The odor can sometimes be rather suffocating. 8 . How to Refine Gold Refining gold There are several things you will need in order to refine gold. You may want to do this on a long table outside where you will get plenty of ventilation. Tips & Warnings These chemicals are very dangerous. o 6 Heat the gold. Filter the solution again using a coffee filter. but some can even kill you if ingested. Rinse and dry the filter containing your gold.000 degrees F until the gold is smooth. especially if you try do this in a closed room. Cover the gold and the filter with borax and place it in a furnace that is capable of reaching temperatures of 2.
otherwise it could overflow and you could lose some gold. you will add 30 milliliters of nitric acid. so don't add the mix too quickly. This kills the nitric acid. Slowly add the water and urea mix to the acid.0. The acid will foam. Add nitric acid to the gold in the container. Wait 30 9 . o 3 Pour the mixture into another container by filtering any particles that could contaminate the gold. stop adding the water/urea mix. Add 1 pound of urea. You will want to wait at least an hour before filtering the acid. If it isn't clear and it appears cloudy or musty. For every ounce of gold. Once the acid stops foaming. Add this solution to the acid slowly to prevent overflow. For every ounce of gold. o 1 Put your gold in a container. Particles of gold will be forming in the water. Then let it sit for at least 30 minutes. The acid will change to a muddy color.1 to 1. o 5 Take another quart of water and boil it. The acid will become a clear emerald green color. which is used to adjust the pH level of the acid. You will have raised the pH level from . but not the hydrochloric acid.Things You'll Need Rubber gloves Goggles Rubber apron Instructions 1. The mix will turn brown and become very hot. You could wait overnight for this part. you will need a container that is the size of 300 milliliters. Add an ounce of storm precipitant for every ounce of gold in the container. o 4 Take a quart of water and boil it. o 2 Add 120 milliliters of hydrochloric or muriatic acid for every ounce of gold in the container. re-filter the mixture.
can dissolve gold itself. Dissolving and Filtering Gold 10 . Gold ore found in the ground is bound to other (often undesirable) minerals. Once you poured out all of the acid. o 6 Pour the acid into another container by filtering. White vapors will the appear and you will need to rinse again and then let the gold dry. While nitric acid alone can dissolve some unwanted minerals (such as pyrite) from gold ore. As valuable as pure gold is.minutes. gold is rarely pure. add water to the mud and stir. Aqua regia -. Instructions 1. and even refined gold used in jewelry often has contaminants in it.a mixture of nitric acid and hydrochloric acid -. Use precious metal detection liquid in order to detect dissolved gold so that none is thrown away. Take the muddy particles out of the container and proceed to rinse three to four times and then pour aqua ammonia on the gold. it is unable to penetrate large gold bodies or refine relatively pure gold. You will have what looks like mud on the bottom of the container and you do not want to pour this out. then test the acid for any presence of dissolved gold. How to Refine Gold With Nitric Acid Chemical refinement is a common way of increasing gold purity. allowing pollutants to be filtered off so that very pure gold can be extracted as a precipitate. This is gold.
Pour the acid into a larger Pyrex container.either under a fume hood or an isolated location outdoors.repeat until the acid is a transparent green color. Retrieving the Purified Gold o 5 Boil one quart of water and remove it from its heat source.very slowly -.into the acid until it stops foaming.this will cause the acid to become a brownish color as the dissolved gold binds to the precipitant. o 4 Boil one quart of water and remove it from its heat source. Choose a work station in a well-ventilated area -.you will need a Pyrex beaker with 300 milliliters of capacity for every ounce of gold.the mixture will get very hot as the gold begins to dissolve. o 3 Add to the beaker 120 milliliters of hydrochloric acid for every ounce of gold -. Allow the acid solution to sit for at least 30 minutes.o 1 Put on safety goggles. Pour the mixture -. Put the gold in the beaker and carefully add 30 milliliters of nitric acid for every ounce of gold. o 6 Add the solution to the acid -. rubber gloves and a rubber splash apron. Allow the acid to sit for at least 30 minutes -.do not inhale any fumes produced by the solution. 2. o 7 11 . o 2 Determine the weight of the gold product in ounces -. Allow the beaker to sit undisturbed overnight to ensure that all of the gold is fully dissolved. Add to the water one ounce of precious metal precipitant for every ounce of gold -.very slowly and carefully -. Mix one pound of urea with the water.avoid inhaling any fumes emitted by the acid. Strain the acid through a Buchner filter funnel to remove particles of undesirable minerals -.
Repeat until the detection test comes up negative. then add additional precious metal precipitant solution to the acid. o 11 Add a small amount of distilled water to the gold particles and pour them into another Pyrex beaker -. Apply a drop of a precious metal detection liquid to the spot on the paper towel -. o 12 Melt the gold particles and cast the now-pure gold however you wish. Repeat this process several times.put the brown gold particles in another beaker and set aside the water for later disposal. Neutralizing the Acid o 13 12 . then gold is still dissolved in the acid and the solution should be given more time to work. Strain the water through another filter -. o 10 Pour a small amount of aqua ammonia on the gold particles to remove lingering impurities and neutralizing any remaining acid on the particles. Test the solution again after another 30 minutes -.Dip a stirring rod into the acid solution and dab the end of the rod onto a paper towel. Put the beaker on a hot plate and turn it on to boil away any remaining water and dry the gold particles. Filter strain the gold particles from the aqua ammonia.if gold is still detected.make sure to get all of the gold particles out of the original beaker before putting it aside. Rinse the particles with distilled water and filter strain them one more time. Cover the particles with tap water and stir them thoroughly.if the liquid becomes a dark purple color. o 8 Run the acid solution through a Buchner filter funnel to extract the brown particles of gold and put the remaining acid solution aside for later neutralization. 3. o 9 Put the brown gold particles in another Pyrex beaker.
Add additional baking soda if the mixture continues to fizz after pouring all of the acid. If a violent reaction occurs.always assume that a hot plate is hot.you don't want the force of a torch blowing them around. Stir the mixture thoroughly. or regia) thoroughly and with caution.all three can produce hazardous fumes and all three can cause severe burns upon exposure to eyes or skin. it is better to be splashed by water with a small amount of acid in it than acid with a small amount of water. may have come in the combined aqua Tips & Warnings Be careful when melting the gold particles -. Use caution when using hot plates -. Use extreme caution when handling nitric acid. possibly violently. o 16 Wait until the mixture is no longer fizzing and drain. Use safety equipment at all times when handling these acids. Turn off and unplug a hot plate after use. always add the acid to the water -. Do not dispose of any acid without neutralizing it first. Flush the drain with copious amounts Rinse all of the beakers and equipment that contact with any acid (nitric. hydrochloric. When mixing water and acid. 13 .Pour a large amount of water (at least twice as much water as the combined acid volume) in a large plastic bucket. Add sodium bicarbonate (baking soda) to the water until the water is completely saturated and a pile of baking soda is seen at the bottom of the bucket. o 14 Pour the water that was used to distill the gold particles into the bucket to neutralize any lingering acid that may be present. o 15 Pour the remaining acid into the bucket very slowly and carefully -the mixture will heat up and fizz. Melt them in a secure crucible or metal-melting pan.never add water to acid. then pour it down a of water afterward. hydrochloric acid and the combined aqua regia -.
ZONEDING. according to ResponsibleGold. The gold-carbon mixture is put in a vessel where the gold is removed chemically. Initial Processing of DifferentTyes of Ore o o If the gold is a low grade ore. 14 . which removes sulfide and carbon. the gold is melted into dore bars composed of 90 percent gold. o Gold is purified through a process of high temperature heating or chemical exposure. Refractory ore contains carbon and is heated to over 1000 degrees F. Sulfide refractory ore that contains no carbon is oxidized in an autoclave to free gold from sulfide minerals. then chlorine is bubbled through the liquid.1. then it is broken up into chunks that are then put in carefully lined pads and treated with a dilute cyanide solution. The resulting oxide ore is directed to the leaching circuit. Other Means of Refining Gold o According to Hoover and Strong. then it is sent to the leaching circuit. depending on the purity of the mined gold. After a sample of treated impure gold has been tested in a lab for purity.org. Sponsored Links Gold processing plant Got ISO9001:2008/SGS Certificate. the metal is sent to a grinding mill and made into a powder. which dissolves the gold. The chlorine attaches to elements in the gold that then become solid and move toward the top of the furnace. a refiner and manufacturer of precious metals. The bars are then sent to an external refinery to make them 999. they produce 98 percent pure gold using the Miller process. The gold is then extracted from the solution by electrolysis or chemical substitution.9 parts per thousand pure gold. Purifying the Gold o At this point.com Further Refining o At this point. The carbon is then recycled. treated high grade ore is leached with cyanide and gold is collected onto activated carbon with the cyanide solution being recycled. For high grade ore. www. All Mineral Processing Equipment. the gold is melted in a furnace.
Guyana (26%) and the second most important for Guinea (23%). which account for roughly two-thirds of global gold production. The Role of Gold in Modern Society Gold mining's value to developing countries Gold mining is vital to the fragile economies of many impoverished countries. gold mining is a foundation industry that often provides the critical mass for the development of electricity. There is potential for substantial additional production in several other countries. gold production provides royalty and tax income to their governments. social. Most of this came from low-income or lower-middle-income countries that together accounted for two thirds of global output. Electrolysis is ultimately used to purify the gold. Tanzania (44%). Developing countries accounted for 72% of global output in 2004. The strongest rise in output has been seen in Heavily Indebted Poor Countries (HIPCs).They are skimmed off. The rise in HIPCs' output has been paralleled by rising export dependence on gold. legal and financial infrastructure. In many of these countries. gold exports in 2003 amounted to 87% of debt service payments. technology transfer. Gold mining can also bring substantial improvements in physical. For HIPCs as a group. 14 are significant gold producers with lesser or minor production in at least another 14 countries. water. For the 27 HIPC countries that have reached decision or completion point (those that receive at least some debt relief under the HIPC initiative). It is one of the most important exports for HIPCs. gold accounted for 13% of goods (merchandise) exports of the 14 significant producers and 10% of their exports of goods and services. In 2003. In addition to generating export revenue in these countries. gold accounted for nearly 8% of goods exports and over 6% of exports of goods and services. worker training and the creation of a skilled workforce. Ghana (32%). Gold is the leading export for Mali (59% of goods exports in 2003). whose gold production rose by 84% between 1994 and 2004. Of the 38 HIPC countries. A $10 fall in the gold price would cause a loss of around $75m in HIPCs' export income. that are the essential foundations of an economy. 15 . road and rail transport in a region.
water. Similarly gold mining brings benefits to poorer nations. both political and economic. Gold also 16 . the Middle East. In one or two cases it has provided the foundation for a significant jewelry manufacturing industry. bars and high-carat jewelry play a crucial role as a means of saving and defense against misfortune to many of the poor of the world. gold is the leading export for both South Africa (13% of goods exports in 2003) and Peru (17%). Yet gold coins. is essentially free of the distorting subsidies applied by some developed countries to agricultural production. legal and financial infrastructure. This characteristic of the industry is particularly important in Africa where lack of infrastructure has been identified as one of the major hindrances to economic development. Among lower-middle-income countries. Gold is often thought of as synonymous with wealth.Gold is equally important to other low-income countries that are not HIPCs. gold is the leading export for Kyrgyzstan (around 45% of total goods exports in 2003) and Papua New Guinea (36%). Mining is a foundation industry that often provides the critical mass for the development of electricity. For men and women throughout the developing world. and the Indian subcontinent. social. skilled employment and training for local populations. The use of jewelry as savings is often important in rural areas where access to a reliable and appropriate banking system is difficult or impossible. gold is the best possible protection against upheaval. quite simply the most efficient store of value they possess. The establishment of a formal mining industry can be the first step in a country's industrial development. road and rail transport in a region. Export revenue is not the only benefit gold mining brings to a developing country. Gold mining companies source supplies locally where possible and employ local labor where possible. Gold's value to consumers and investors in developing countries In much of Asia. It provides royalty and tax income to governments. even allowing for some necessary imports and for the remittance of profits and dividends. It will continue to have a role to play in fostering economic development. technology transfer. and metals mining generally. their impact on a developing country's balance of payments is strongly positive. Thus. the second most important export for Mongolia (20%) and Zimbabwe (11%) and one of the two leading exports for Uzbekistan. together with further jobs through the multiplier effect. Among those considered by the World Bank to be severely or moderately indebted. Around two thirds of the jewelry purchased in the Middle East and Asia is used as a means of saving in addition to its function as an adornment. gold is still one of the most liquid and widely accepted forms of exchange. Gold mining. Gold mining can also bring substantial improvements in physical.
the practice of giving an Indian bride gold. jewelry was often the only asset a Muslim or Hindu woman could own in practice. which is considered Streedhan. Countries such as Turkey. which holds its value in terms of purchasing power. or the Vietnamese dong. Buying a home in Vietnam takes time. but gold was an excellent investment in terms of for. While inflation has essentially been non-existent until recently in most developed countries. gold plays an important role in the purchase of a home. generating export earnings and employment. 17 . India is the world's largest market for gold jewelry.offers protection against a weak currency or high domestic inflation levels. Where men and women do not have easy access to liquid markets in company stock or government bonds. if not billions. This arrangement means the buyer will still have enough to pay the agreed price when the sale is consummated. as is the case in most countries. inflation and the attendant currency depreciation have been rampant. accounting in 2004 for one fifth of the global total. Gold jewelry sales to tourists are also important for Turkey. The US dollar price of gold did not perform well for 20 years from 1980 to 2000. Gold's value to women living in developing countries In the Middle East and the Indian sub-continent gold plays an important role in the financial security of women. or "property of the woman". in many developing countries. and in more traditional families this is still very much the case. in Vietnam. causing hardship to millions. the value of the Vietnamese currency may have fallen sharply. gold has proved over and over again to be the most valuable financial asset to own. of people. or even any bank account at all. A woman's gold can therefore be her only protection against personal misfortune. which are prevalent and persistent problems in the developing world.weddings. Accordingly. India. Historically. the buyer will arrange financing with a bank not in terms of the Vietnamese dong. For example. Gold's important role in society's long-standing customs Gifts of gold make a vital contribution as tokens of love and precious souvenirs on those emotional occasions that bring people together . as the current rate of currency depreciation in that country is very rapid. but in gold. example. the Indian rupee. the Turkish lire. especially in rural areas. to US dollar bank accounts. During this time. From the moment a buyer and seller agree on a price to the day the paperwork and sale are completed takes a month or longer. Egypt and Dubai. Around two thirds of all jewelry manufacture takes place in the developing world and the proportion is rising. China and Thailand have all seen their exports to developed countries rise in the last few years. Hence.
consumer demand for gold jewelry is growing by over 20% per annum. Gold's value as an effective portfolio diversifier Gold is a highly effective portfolio diversifier due to its low to negative correlation with all major asset classes. religious ceremonies such as baptisms. Gold has inspired craftsmen to create objects of desire that unite us with our emotions. The earliest gold jewelry dates from the Sumerian civilization that flourished in the fertile basin between the Tigris and Euphrates rivers around 4. Gold's function as an adornment. gold is inversely correlated to the US dollar. gold has shown no statistically significant correlation with equities.000 BC. and so on. has been in existence for over 6.) Gold is an effective hedge against inflation. sensuality and spiritual richness of gold has earned it pride of place as the favorite metal of jewelers. In addition. As an asset class. and many more. there are some economic factors that influence the performance of all investments. In the Middle Ages. Christmas and other religious holidays.000 years. making it a good currency hedge. Gold as a preserver of value (inflation hedge. The fundamental reason for this lack of correlation is that the factors driving the gold price are not the same as the factors that determine the returns on other assets. safe haven. etc. Today. Mother's Day. Frankfurt. That applies not just to domestic US equities. But equally obviously. Over the last 20 years. Gold has also shown no statistically significant correlation with other mainstream asset classes. Tokyo. but also to international equities. such as US Government bonds. This level of demand far outstrips the supply for gold that mines can produce. Obviously. gold has all the advantages of being universally regarded as a currency. They believed that gold was a source of immortality. Treasury Bills. demonstrating the confidence that women around the world have in gold. changes in gold supply and demand have no influence over the other asset classes. alchemists attempted to use their magic to make gold from other metals. birthdays. birthdays.anniversaries. as jewelry. and equity real estate investment trusts. including those traded in London. 18 . Why is gold so coveted? Since the beginning of time. without what are all too often the disadvantages of being subject to the economic and monetary policies of one particular country's government. warmth. graduations. the intrinsic beauty. and so it was used in medicines designed to fight old age and prolong life.
However. because gold is opaque to x-rays. This means that. an inverse correlation can develop between gold and equities. even though it is no longer the center of the international financial system. 19 . Other medical implants that contain gold are pace makers and insulin pumps. Gold's value in industrial applications Gold ranks among the most high-tech of metals.As a rule. air bags. And this aspect of gold's behavior runs directly counter to the way other asset classes perform in stress situations. Gold has a track record of holding its real value over the centuries. and because of this it is the material of choice for implants that are at risk of infection. Gold accounts for 9% of reserves held by central banks (valued at market prices). and many other things we consider indispensable to our modern lives. Since gold is no-one's liability. The central bank of Argentina. The most important reason is that gold is the only reserve asset that is no one's liability. Gold is used in these devices because of its high level of reliability in micro electronics. the value of gold cannot be affected by the economic policies of the issuing country or undermined by inflation in that country. Approximately 12% of demand for gold comes from industry. there is evidence that when equities are under stress. gold-coated "stents" are inserted into clogged arteries to clear the flow of blood. when diversifying a portion of its reserves away from 100% reliance on the US dollar in 2004. laptop computers. which helps ensure optimal effectiveness. gold plays an important role in medical implants. for example. performing vital functions in many areas of everyday life. space travel. surgeons are able to place a stent with the utmost precision. it can not be repudiated and holding it is a safeguard against potential unforeseen crises. For example. Gold's value as a currency reserve Gold is still considered an important reserve asset by most central banks. Medical Applications Because it is "biocompatible". mobile telephones. unlike a currency. included gold in its purchases. Gold's unique properties make it useful in medical applications. pollution control. Also. gold shows no statistically significant correlations with mainstream asset classes. in other words when shares are falling rapidly in value. Gold possesses a high degree of resistance to bacterial colonization. Gold also brings much needed diversity to a central bank portfolio due to its low correlation with key currencies and its strong inverse correlation with the US dollar.
without damaging the tissues themselves. its nonreactiveness. This is important in the treatment of a range of diseases.a tiny covering of gold is used to encase micro doses of drugs on an electronic chip that is implanted in the body. measuring only 25 nanometres across. Gold has a long tradition of use in this application and is considered a very valuable metal in microsurgery of the ear. anti-cancer drugs. the virus that causes AIDS. which create useful organic products as oxygen atoms and carbon compounds combine. 20 . gold is the preferred material for a branch of medical research the scientists call "biolistics". three of gold's attributes are crucial: first. When the chip is electronically activated to dissolve the tiny casing of gold. the fact that gold is dense . In a similar way. because it is a marriage of biology and ballistics. New research published in the top scientific journal Nature has revealed that gold catalysts can clean up an important chemical process that is used every day to produce tons of pharmaceuticals. just as with the stents. On the molecular level. can split oxygen atoms. thereby facilitating oxidation reactions. the Institute for Green Technology in Tokyo has 30 scientists working on gold catalysts for environmentally sensitive. an appropriate dose of drug is released. detergents & food additives. Environmental Applications Recently. Second. Gold is being used increasingly in pharmaceutical applications. so that the researchers can observe the reaction. By way of example. In this application. technology applications. Gold helps doctors to deliver precise doses of powerful drugs to the parts of the body where they are required. such as pollution control (mercury emissions) and fuel cells. Strands of DNA are blended with microscopic gold powder and injected into the skin in search of targeted cells. including cancer and HIV. As a chemical catalyst. And finally.it has a high ratio of mass or weight to volume . Or in what doctors have started to describe as a "pharmacy on a chip" .means the compound can achieve the high speed required to penetrate the targeted cell. it has been discovered that gold nanoparticles. gold has applications through its organic and chemical compounds used in medical science: for instance.such as the inner ear. the fact that it is opaque means it can be precisely located. Gold is ideal for delivering biologically active materials directly into the target tissues in the human body. or "green". or altering the biological activity of the material being delivered. gold is playing an important role in new environmental applications.
And every time you touch a key on your computer it strikes a gold circuit that relays your command to the computer's microprocessor. In recent years. New Mexico and Utah. goldproducing state. gold producing states are Alaska. Other Applications The standard touch-tone telephone would not function without the 33 contacts made from gold it contains. 21 .nma. Other top U. Gold does not corrode or tarnish. Nevada is the largest U. And as catalysts for chemical and petrochemical processes. so it is much more reliable than other metals in electronic applications.org/statistics/pub_gold_silver. therefore. for detecting gases in industrial processes. In addition. Gold is one of the most effective conductors of electricity known to man. California. Gold Production & Refining The top three gold producing countries in the world are South Africa. by means of fuel cells. Sensors. and in the environment.To give you an idea of the importance of catalysis. Gold may lead to new routes for the manufacture of many vital chemicals. According to the U. does not react when it comes into contact with other substances. catalysts using gold have become a very hot topic of research. the United States and Australia in that order. Gold is also inert and. There have been breakthroughs in research studies that have shown gold to be an excellent catalyst in a number of important chemical reactions. Geological Survey. Air bag systems fitted in more than 30 million cars around the world rely on gold-coated electrical contacts.S. The following is a generic description of how gold is mined and produced around the world at modern operations. While mining and production methods vary from location to location. Some of the potential applications include: Pollution control in diesel-powered vehicles. it has been estimated that about one trillion dollars of the Gross Domestic Product of the United States is derived from processes that use some form of industrial catalysis. and its reliability compared with other metals such as palladium or copper is increased by the fact that gold is also an excellent conductor of heat. Colorado. Clean energy generation.asp Most gold in the United States is produced at above ground surface (open pit) mines. For more statistical information about gold and silver production in the United States: http://www.S.S.
which requires precise and accurate measurement of the ore deposit. Samples of ore are examined to determine grade and metallurgical characteristics.How Gold is Produced This chart illustrates the general steps in open-pit gold mining. a dispatcher directs truck operators to deliver the ore to the correct processing location. Geologists use the latest technology. Construction begins following the lengthy process of receiving permits. Broken rock is marked by type for efficient processing. Low Grade Ore is roughly broken into small chunks and placed on carefully lined pads where a dilute cyanide solution is distributed over the surface of the heap. Based on its metallurgical makeup. The specifics of the process vary from mine to mine. Computers are used to design the mine. such as satellite surveys and geochemistry. to locate an ore deposit. 22 .
High Grade Ore is delivered to a grinding mill. burning off the sulfide and carbon. The product of this process is an oxide ore. which is routed to the leaching circuit. the ore may be treated in one of three recovery circuits. then it is sent to the leaching circuit. This solution containing dissolved gold is then collected. Treated. Refractory ore containing carbon is roasted to over 1. Depending on its metallurgical characteristics.The solution percolates through the heap and the cyanide dissolves the gold. Sulfide refractory ore without carbon is oxidized in an autoclave to liberate the gold from sulfide minerals. high-grade ore is leached with cyanide.000 degrees Fahrenheit. where the ore is pulverized to a powder. 23 . Oxide ore is sent directly to the leaching circuit where cyanide dissolves the gold.
Reclamation is a long-term investment made by every gold mining company. and can cost anywhere from $2.9 parts per thousand pure gold.000 to $10. Dore' bars are then sent to an external refinery to be refined to bars of 999. The remaining cyanide solution is recycled. Gold is precipitated from the solution electrolytically or by chemical substitution. The pure gold is then melted into dore' bars containing up to 90 percent gold. It is the cornerstone of every mine plan and is considered the first and last step of the mining process.000 per acre. (For 24 . The gold loaded carbon is moved into a vessel where the gold is chemically stripped from the carbon which is then recycled.The gold is absorbed (collected) out of solution onto activated carbon.
see NMA's Facts About Gold and Silver. the gold "dore" is sent to a refinery for further processing. see NMA's gold uses page. At most gold mines. * For statistical data on the economic impact of gold production. gold is refined to an acceptable purity as part of the copper production process. see the Reclamation section of the NMA Website. such as copper. Gold is produced at some mines as part of the process of mining and refining other metals. telecommunications and medicine. At those operations. 25 .more information on reclamation.) * For information on how gold is used in electronics.
which regulates access to federal lands. for example.S. Requirements affecting environmental performance and public comment. where much of the land is owned by the federal government. Rather. gold moves through a number of complex commercial transactions that are depicted in the following chart. This land-covering approximately 700 million acres-is the responsibility of the Bureau of Land Management (BLM) 27 . Laws & Regulations U. Chart provided by Gold Field Minerals Service. gold is not sold by the producer to the customer. Most metals mining in the United States occurs in 12 western states. apply to mining as well as the rest of American industry. is specific to metals mining. state and federal laws and regulations that govern how mines are operated and how mined land is reclaimed for other beneficial uses.Chain of Custody Unlike many other commodities. The General Mining Law (the 1872 Mining Law). gold mining operations must comply with a broad range of local.
these initiatives integrate environmental. mining operations also have committed to a number of voluntary codes and initiatives aimed at responsible mining practices and sustainable development. Department of the Interior. Here is information on some of the prominent codes of conduct and voluntary initiatives in which gold producers are involved..asp. Forest Service oversees a variety of federal land uses. or if the current system of state and federal laws and regulations was more protective of the environment.nma. Laws and Regulations Governing Gold Mining on Private and Federal Lands MicroSoft Power Point Presentation (PPT).S. While varying in scope. leasing or sale is restricted. for example. International Compacts Initiative Global Compact Sponsor United Nations Scope 10 principles. Codes & Initiatives In addition to compliance with applicable laws and regulations of local. 724 KB For the position of the U. Barrick Gold Corporation (Peruvian Subsidiary).S.S. processing technology and metals chemistry. Recently. Mining companies may be involved in one or more efforts based on the countries in which they operate. it was not possible to develop a uniform set of standards and recommended the current approach as the preferred alternative. state. Endorsements AngloGold Ashanti Ltd. Newmont Mining 28 . the BLM or the U.org/policy/legislative/mining_law_reform.of the U. forestry and railroad rights of way. social and economic principles. Roughly half of that land is either totally withdrawn or entry. mining industry on a national minerals policy and mining law reform http://www. soils composition. including ranching. For a more comprehensive overview of the laws and regulations governing gold mining in the United States: U.S. regional and national governing bodies. the National Academy of Sciences (NAS) evaluated whether metals mining and mined land reclamation should be subject to a uniform set of laws that covered only mining. Annual reporting on progress required. The NAS found that because of varying topography and climate conditions. Of the remaining land. mining.
organizations and mining companies BHP Billiton Ltd. Kinross Gold Company. Barrick Gold Corporation. Initially focused on Australia. Likely to be incorporated into WB safeguard policy and Equator principles. standards of practice. Research project to investigate potential for certification of mining industry based on the 10 principles and 46 elements of the International Council for Mining and Metals (ICMM). NGO. Newmont Mining Corporation. Program being implemented. Placer Dome Inc. Placer Dome Inc. Placer Dome Inc. and certification process. CyPlus. being tested at 5 sites in Australia. International Cyanide Management Code Six gold mining companies and producers (code developed with UNEP.. Oxfam Community Aid Abroad and other NGO's. Orica Mine Certification Evaluation Project (MCEP) World Wildlife Fund. labor and financial institutions participation) Best practices and management standards for cyanide use in gold mining. Draft criteria developed. Rio Tinto Ltd and WMC Resources Ltd Voluntary Principles on Security and Human Rights US and UK governments. Newmont Mining Corporation. AngloGold Ashanti Ltd.Corporation. Rio Tinto Ltd and Newmont Mining Corporation Mining Industry Initiatives Initiative Sponsor Scope Status or Endorsements Members of MCA including AngloGold Minerals Council of Minerals Council of Sustainability Australia and performance 29 . NGO's and mining companies Freeport McMoRan. International Cyanide Management Institute finalizing implementation protocols. DuPont. Rio Tinto.
Kinross. Rio Tinto and others @ www. Indicators being developed by multistakeholder task force. Freeport McMoRan. Newmont Mining Corporation. Placer Dome. Newmont. Framework replaces the MCA Environmental Code. Newmont.org Sustainable Development Principles National Mining Commitment to Association (NMA). Kennecott.minerals.ca Members of NMA including Barrick Gold Corporation. and others @ www.mining.. ICMM ICMM Sustainable Commitment to 10 Members of ICMM high level principles including AngloGold 30 . social and economic principles in mining operations from exploration through reclamation and post closure.org. Closely linked to ICMM charter principles.nma. Reporting required. Barrick Gold. Members of ICMM including AngloGold Ashanti Ltd.Australia member companies (MCA) Sustainability Framework standards. Mining Association Sustainability of Canada and performance member companies standards.. Placer Dome Inc.icmm. Condition of membership. Kinross. Reporting required. Kinross. Placer Dome Inc. Newmont Mining Corporation. and others @ www. integrate 20 USA environmental.com "Towards Sustainable Mining" Members of MAC including Barrick Gold Corporation. Placer Dome. Rio Tinto and others @ www. Ashanti Ltd.au Global Reporting Initiative GRI and ICMM Develop mining member companies sector sustainability reporting indicators (Mining and Metals Sector Supplement).
environmental performance. risk management.com Community ICMM and World Development Bank Good Practice Tools Members of ICMM including AngloGold Ashanti Ltd.. Placer Dome. ICMM/International Union for the Conservation of Nature (IUCN) Agreement not to mine or explore in UNESCO designated world heritage sites.. health and safety. Placer Dome. Community Development Best Practice Guidance. Placer Dome.icmm. Rio Tinto and others @ www..com Protected Areas Members of ICMM including AngloGold Ashanti Ltd.com Members of ICMM including AngloGold Ashanti Ltd. DFID Under construction Website and UNCTAD 31 . Plans to discuss other protected areas and biodiversity. Newmont. biodiversity and land use. Rio Tinto and others @ www. Rio Tinto and others @ www.com Good Practice ICMM. Newmont. Freeport McMoRan. Freeport McMoRan. Ashanti Ltd. integrating sustainable development. human rights. and disclosure. product stewardship.icmm. UNEP. community development.. Rio Tinto and others @ www. Newmont. Freeport McMoRan.Development Charter covering ethics. Placer Dome. Freeport McMoRan.icmm. Newmont.icmm.
waste management. Other Initiatives Initiative Sponsor Scope Status or Endorsements 32 . Rio Tinto and others @ www. security and human rights. closure. Application in developing countries. Policies being drafted by World Bank staff. core labor rights. Application to other projects through Equator Principles (see below). World Bank (WB) Safeguard Policies and Guidelines World Bank and International Finance Corporation Updates and new safeguard policies or guidelines expected on cyanide. tailing disposal. community roles in monitoring projects. Placer Dome.. Members of ICMM including AngloGold Ashanti Ltd. Program being implemented. Incorporates WB safeguard policies for all projects greater than $50 M. Equator Principles Major international banks. ARD and submarine tailing disposal.com Financial Sector Initiatives Initiative Sponsor Scope Status or Endorsements Projects with World Bank or International Finance Corporation funding. Newmont. Freeport McMoRan. and indigenous peoples rights.icmm. Leading financial institutions are signatories to these principles.Emergency ICMM and UNEP Response APELL Project In Development.
Placer Dome. Rio Tinto.icmm.. Members of ICMM including AngloGold Ashanti Ltd. initiative development Working group and task force to be established to develop standard.) "Publish what you pay" guidelines developed on payments made by companies to governments. Kinross. Newmont Mining Corporation. ICMM monitoring initiative development WEF AntiCorruption Initiative World Economic Forum (WEF) Corporate Initiatives Initiative Environmental. Barrick Gold Corporation. Two codes of practice developed. Goldfields Jewelery Sector Initiatives Initiative Council for Sponsor Scope Status or Endorsements Fourteen founding Jewelers Promotes responsible 33 .Extractive Industries Transparency Initiative UK government along with other institutions (WB etc. Rio Tinto and others @ www. Freeport McMoRan. Initial implementation underway.com International Standard on Social Responsibility International Standards Organization (ISO) Developing a standard ICMM monitoring for social responsibility. Set of business principles to counter bribery and corruption. Freeport McMoRan. Safety and Corporate Social Responsibility Reporting Sponsor Corporate and site level sustainability reporting. Scope Companies issuing annual reports Status AngloGold Ashanti Ltd. Expected to be included in Mining and Metals Supplement of GRI. Placer Dome Inc. Newmont.
Tiffany and Zale 34 .Responsible Jewelery Practices (CRJP) of America ethical. members include bhpbilliton. Newmont. Cartier. social and environmental Practices throughout the diamond and gold jewellery supply chain from mine to retail. DTC. Rio Tinto. rosyblue. Signet. ABN-AMRO.
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