“All that glitters (glisters) is not gold”
–The Merchant of Venice, 1596
Aphorisms like these reinforce the value of gold! The yellow metal has been associated with intrinsic worth since time immemorial. It has been used as jewellery for at least five millennia. The rarity of the metal made it a symbol of power and position used only by the powerful ruling classes. However, it was no coincidence that made gold the most valued metal for the rich and powerful.
Its physical attributes like malleability, ductility and non-corrosiveness made it ideal for jewellery. Gold does not corrode or tarnish which made it a symbol of immortality in ancient cultures. It can be easily beaten into thin sheets and wires which helped craftsmen give shape to the metal. The trend has largely sustained, with over half of the current gold production being used as jewellery. Besides jewellery, gold is used as an investment asset, and unknown to most people, it also finds application in a variety of industrial uses.
Industrial uses of gold
The physical properties that made gold an ideal metal for jewellery also make it suitable for use in electronics, glassmaking and aerospace industries. It is used to produce speciality glass for climate-controlled buildings. A gold-coated glass reflects the solar radiation and keeps the building cool in summers, while it reflects the internal heat and keeps the building warm in winters. Gold is also used to make cranberry glasses for ornamental uses.
In the aerospace industry, the precious metal is used in the circuitry of the space vehicles. It is also used in the protective polyester film which is used to keep out ultraviolet radiation and modulate the temperature inside the space vehicle. Space bound objects use gold as a lubricant as organic lubricants will not be able to withstand the harsh conditions of the outer space. Gold is an excellent conductor of electricity which has made it indispensable for the electronics industry. The yellow metal is used in smartphones, calculators, GPS devices and laptops.
Use of gold in smartphones
When you hear the use of gold in a smartphone, the first impression is of a limited edition gold and diamond-studded phone. The reality is vastly different. Being extremely compact, smartphones need low voltages and currents to function properly. Being an efficient conductor of electricity, gold is used as connectors, soldered joints, connecting wires and connection strips. What makes gold so important, when there are other excellent conductors like copper? The non-corrosive nature of gold. The precious metal does not corrode or tarnish when it comes in contact with the air. Metals like copper oxidise which can disrupt critical functions of an electronic device. Gold is considered a highly reliable material for important components. High malleability enables manufacturers to use a very thin strip of gold, sometimes a millionth of an inch thick. The high gold price is justified by the efficiency and stability that gold provides. Gold is also used as a bonding wire to make electrical connections between the semiconductor terminals and a thin layer of metal in the device.
The use of gold in electronic devices, even in minute quantities, has led to significant loss of the metal. The supply of gold is limited, which is also a reason for high gold prices. The production of the precious metal is expected to peak very soon as the discovery of new mines is slowing. People generally discard their smartphones after its lifecycle gets over and it ends up in dump yards. Even though the amount of precious and rare metals is very small in a single smartphone, but the quantity is substantial if you consider the number of smartphones wasted every year. A study found that only 15 percent of the valuable metals used in electronic devices is recovered. According to Umicore, a Brussels-based technology company, a ton of old phones can yield about 300g of gold.
The use of gold in electronic items cannot be curtailed, even though it leads to a lot of wastage. It weighs on the global supply chain and pushes up gold prices. An alternative could be to increase supply through liquidation of unproductive gold kept in secure lockers. Many people buy gold as an investment and lock it away. A more efficient way to invest in gold is through digital gold. Digital gold is secure as it is backed by physical gold and buying it is very easy. At Finserv MARKETS, you can buy digital gold in a few clicks of the mouse.
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