The Five Stages of Metal Refining: From Ore to Pure
The Royal Canadian Mint refines their gold using these five steps:
Doré bars in purities ranging from 5% to 95% are melted in a furnace. Dip samples are taken from the molten gold to determine its purity.
Chlorine gas is injected into the molten metal mix. All metals but gold float to the surface to form a slag of molten chloride. The resulting 995 fine gold is poured into an anode mould.
Soda ash is added to the molten chloride slag recovered from chlorination. The reaction causes gold particles to collect in a silver-gold alloy ‘button’ that settles at the bottom of the crucible.
This process brings gold to 9999 purity. The gold anode is placed in a bath containing a solution of hydrochloric acid and gold chloride. The anode is then subjected to an electric current. The anode dissolves, and the dissolved gold plates onto a titanium cathode. Impurities (mostly silver) fall to the bottom of the cell or form soluble chlorides.
5. Final pour
9999 fine gold is cast into bars of various sizes or turned into granulation gold.
The Gold Refining Process
The gold price has different meanings for everyone. For some, it is a source of wealth, for others it is the cost of fine jewelry, and there are many more who just don’t really care about it.
Is There Value in the Gold Price?
No matter what your opinion on the precious metal, gold is an important resource in our world and plays a significant role in our global economy. Even if it doesn’t interest you from an investment or fashion standpoint, the gold price is sure to affect you in some way.
With such a difficult to understand value proposition and tremendous economic weight, many ask “why?”.
“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
While this may be true, in most countries gold has a very important role to play through deep rooted cultural traditions and as a store of wealth. It’s true that the gold price is simply the value that we assign to it, but in reality this could be argued for just about any scarce resource or capital in a free market economy.
One of the best ways of understanding the gold price is to simply think of it as a currency. While most other commodities have very real and useful value as a source of energy, construction or as food, gold is quite limited in its general usefulness. Likewise, commodities tend to get used up, contributing to a certain amount of continuous demand regardless of the investment interest in it. Gold, of course is always there. Even if it ends up being used in jewelry you can always melt it down and reclaim it into its purest form.
Gold as a Currency
The reason we can equate the gold price to currency is because it really is just used as a store and transfer of wealth, just like cash. The difference is that cash tends to become devalued over time (inflation), whereas gold price almost always has a consistent value compared to inflation.
There are many economic factors influencing the gold price, but the same is true for currency. If all countries and businesses used gold price as the standard of currency it would lead to much more stable levels of exchange and contribute to an easing global trade. Currently, if a company manufactures a product in one country for sale in another, the fluctuations in exchange rates can lead to huge risks to profitability. The recent rise in globalisation has had more to do with the easing of import duties and the establishment of large-scale trade agreements.
A common currency would be the final consummation of true free trade between countries, also known as a currency union. While this has been tried with a certain level of success in Europe with the establishment of the Euro, the idea of using gold price as a common currency for countries in different parts of the world has been suggested as the next major push towards global free trade.
Just such a scheme has been floated as being plausible by an OMFIF report commissioned by the World Gold Council looking into the potential impacts of changes to China’s monetary policy.
While this type of move would be profound and extreme to say the least, it does show the sentiment towards moving away from currency systems that are easily manipulated by governments and towards a more inclusive system that offers greater stability for the businesses that ultimately engage in trade.
Given all this, it seems that there is a role for gold price as an international store of value and commerce, providing a common currency across international boundaries.
Canada Gold reports that tonight’s State-of-the-Union speech from President Obama could provide some fuel for the markets tomorrow, depending on what new policy initiatives are announced.
Considering some of the unexpected content of his inaugural address, Obama could cause a stir in the markets tomorrow if his announcements give investors reason to speculate on the government’s spending growth and its reaction to the looming debt-ceiling.
It will be interesting to see just how serious the President will be on following-through with his commitments announced last month, and just how rattled investors are likely to get following any concrete announcements that are made.
Read the full story by clicking the link below.
|How Will Obama’s State of the Union Speech Affect Gold?
President Obama Speaks to the Nation on February 12, 2013 It’s no secret that financial markets react, often erratically, to speeches made by prominent politicians. Announcements made by Ben Bernanke,…
Gold’s Influence on the Global Monetary System on the Rise
With highly-leveraged and very weak economies around the world seeing their currencies sink in value, a report from the Official Monetary and Financial Institutions Forum, (OMFIF) sees gold playing an important role in the gradual conversion to a multi-currency reserve system.
It is clear that with emerging economies around the world strengthening their positions in gold, and the sinking value of once powerful currencies such as the US dollar and the Euro, gold will come about as a truly international currency that will provide a consistent value relative to world economies.
While the report stops short of predicting a return to the gold-standard, it leaves no question as to the importance of the value of gold: ‘Gold will increasingly have a renewed role in the global monetary system, attracting a higher level of attention from policy-makers and financial market practitioners.’ – OMFIF/World Gold Council Report, January 11, 2013
As more weak economic data comes out of the US, including uncertainty regarding the fiscal cliff, and concerning developments emerge from the Middle East, the price of gold rose today as a safe-haven for worried investors.
Gold is seen as a safe investment in times of uncertainty; a primary factor in current record-high gold prices. Does this mean everyone should hoard gold and keep cash at a minimum? It depends; gold has been an excellent investment over the past few years, but most people keep gold in the form of jewellery and other collections, if these are items you’re not interested in keeping or have lost their usefulness or fashion, cashing in at record-high prices does make a lot of sense! #VancouverGold
The US Federal Reserve’s Federal Open Market Committee (FOMC) has maintained its ambiguous, open-ended outlook after its meeting this week. The FED has stated that employment will provide the main source of direction for its quantitative easing program unveiled last month.
What this means is that, while the unemployment rate in the US is going down, it has some ways to go before any substantive changes will be made to the monetary policy. How much will it have to go down? Again, more open-ended statements, the FED says it will have to improve “substantially” from its current 7.8%.
This spells continued unrest in the markets leading up to the November Presidential election as Romney has stated that Bernake will be out of the FED if he is elected.
Look for gold prices to continue to fluctuate leading up to the election and then take a decisive turn depending on who is elected. We’ll be watching closely and offering more updates in the days and weeks ahead.