November 26, 2021

Why Gold will Always be Finite

One of the reasons gold remains such a reliable investment option is due to the finite nature of the metal, however, what are some of the potential threats to gold investors?

Written by

Dominic

In previous articles we have discussed how gold is a finite resource meaning that one day, there will no longer be any more gold to be mined out of the Earth. In this article we will examine the three different ways that more gold could be extracted and why these methods are unlikely and exist more in the realm of science fiction, helping to demonstrate the longstanding value and security of gold as an investing asset. 


Artificial Gold Synthesis


When scientists first discovered the ability to create diamonds in a lab, the diamond industry was shaken to its core and is still feeling the effects of this to this day. Since time immemorial it has been the dream of scholars and alchemists to turn lead into gold, however modern science is able to achieve such a feat. It is possible to synthesize gold using a particle accelerator, by bombarding atoms to either break apart or merge into new elements. 


In 1980, researchers at the Lawrence Berkeley National Laboratory in California succeeded in creating gold from a lead aligned element known as bismuth. But why has synthetic gold not taken off? 

This method of creating synthetic gold is not practical at all. First off, constructing a single particle accelerator is equal in cost to the space programs of many nations, and with them being kilometres in length they cannot simply be built by anyone. 

Secondly is the energy yield problem, essentially the amount of energy expended to synthesize gold is colossal in comparison to the amount of gold created. One of the lead researchers of the aforementioned project, Glenn T. Seaborg stated: “It would cost more than one quadrillion dollars per ounce to produce gold by this experiment.” Even today the energy costs are so ridiculous that this method of producing gold would only be feasible if we invented nuclear fusion, by which point we would be living in a Star Trekkian utopia anyway. 

So if synthesizing gold is not feasible, what if we turned to another potential source if Earth’s own deposits are depleted?

Asteroid Mining

In August 2022, NASA will be launching a spacecraft to travel deep into our solar system’s asteroid belt to the asteroid of Psyche 16. The asteroid, although discovered in 1952, was later discovered to be composed almost entirely by metals such as nickel, iron and gold. Scientists estimate that Psyche 16 is made up of at least $10,000 quadrillion worth of precious metals, and Psyche 16 is not alone, there are thousands of asteroids all containing vast amounts of metals travelling throughout the solar system.

Credit: Maxar/ASU/P.Rubin/NASA/JPL-Caltech



This is the proposed plan of asteroid mining whereby in the future crews of miners would voyage out into the void to extract rare earth metals from asteroids and other planetary bodies eliminating the dependence on Mother Earth for such metals.

However, asteroid mining has very similar problems to gold synthesizing, due to practicalities and cost. It should come as no surprise that the costs of missions into space are, well, astronomical. The recently launched Perseverance rover to Mars cost $2.9 billion, and that was to transport a rover to Mars.

To successfully mine an asteroid you would need to take into account the needs for enormous heavy machinery, supplies and accommodation for a crew to operate in a deep space environment long enough to extract enough metals and a large enough spacecraft to transport the cargo back to Earth. At this point, again, without a limitless supply of energy the costs are not worth it, let alone the technology that would need to be invented for such an endeavour.

Therefore it does not seem like any space based gold rush happening anytime soon. There is however one untapped source of gold a bit closer to home…

Antarctica

The last untapped continent due to its environmental hostility and distance from the rest of the world. It is a pristine continent that has no permanent inhabitants and its ecosystems are largely unspoilt by human activities, a true wilderness. It is no secret that due to being untouched, Antarctica has a plentitude of precious metals. Although in one of the greatest examples of human cooperation, the Antarctic Treaty was signed by over 46 nations comprising 80% of the planet’s population, preventing the exploitation of Antarctica's resources as well protecting its natural environment and unique wildlife.


Some have speculated that as time wears on and the treaty comes up for renewal attitudes will change towards exploiting the continent. The treaty will be up for renewal in 2048 and the 12 original signatory nations could reject the proposal and open the continent up for exploitation. This ignores the political realities of such an act however. Since the signing in 1961 a number of new nations who hold no claims to Antarctic territory have arisen, such as India and China. The exclusion of these nations could lead to a potential conflict over the last continent and so the risks of a war between nuclear armed global powers might outweigh the extraction of resources. In fact most nations seem more interested in strengthening the treaty rather than pulling out, with additional treaties being added constantly.

Again, while cheaper than synthesizing gold or mining in space, the costs are still huge for mining operations in Antarctica. Even with the melting ice caps, the average temperature is still at freezing during the Summer along with constant storms rolling in from volatile ocean currents making operations tenuous at best. The research bases located there at present have to import all of their food, as the desolate soils, forbidding temperatures and six months of darkness from the Earth’s axial tilt ensures growing crops is impossible.

Overall without the invention of technologies sci-fi writers dream of or risk mutually assured destruction the likelihood of the value of gold being depleted by the mass expansion of current reserves remains a fantasy. The finiteness of gold will continue to provide investing security and stability for potential centuries to come.

If you wish to find out more about how gold represents one of the best hedges against the global financial instability, contact us today using the form below.


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