Ben Johnson emails:
Thought I'd pass along an interesting new development. The major industrial use for gold (which is rarely recovered) is for interconnect points for PCBs, etc.
A Sweedish company has developed a coating purporting to have all the benefits of gold but at a much lower price.
If this pans out, it could put some downward pressure on the price of gold as early as a ,1.5 years from now.
Here's the background info:
http://www.impactcoatings.se/
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I'm going to do more research this week and see how much gold is actually used for interconnect points, to get a sense for what type of decline in demand might result, if this new plating actually lives up to its claims.
Gold in electronics is about 300 tonnes p/annum.
ReplyDeleteYou can read Sprott's work to find out how much is mined.
This is a fart in the wind.
I was going to say...the amount of gold used in electronics is probably so small it couldn't affect the price much...
Deleteplatinum or silver...that's another story
If the price does fall, it is only an opportunity to buy more!
ReplyDeleteSilver is the metal of choice in electronics. It's cheaper, 50/1, with lower resistivity and higher conductivity. Why any manufacturer of electronic components would use gold is an economic and efficiency mistake.
ReplyDeleteSee reference here: https://en.wikipedia.org/wiki/Electrical_conductivity
Gold doesn't tarnish.
DeleteMobility in gold is higher than silver and gold is less prone to oxidative and chemical damage.
Delete.... maybe the choice in electronics made in china...... high end stuff doesn't use silver.
DeleteIf the application is exposed to some element that can cause a corrosive action, then gold might be the preferred material.
ReplyDeleteThe Central Bank should be listed as a corrosive.
d-w-jones: you are right on the facts but you overlooked that gold is more ductile (ie. stretchable). It is this property that makes gold so useful in manufacturing of electronics (aside from its resistance to corrosion).
ReplyDeleteI look forward to seeing a follow up article on this. If its true, then the price of electronics could go down again. Which would be nice to see computer, monitors, and cellphones cheaper.
ReplyDeleteSome miraculous energy breakthrough could bring gold prices down. Believe it or not, the most gold resides in ocean water. Getting it out is not cost effective due to the amount of energy required.
ReplyDeleteOnly 5% of all gold produced in a year is used in industry, of which the electronic junction plating is just one. This 5% is only about 200kgs. Assuming 170Kgs is used in this application (this is too high). There is 170,000mt above ground gold. So if we tried to reduce the use here the effect would be 170Kgs out of 170,000mt drum roll please .0001%. That will definitely have some effect on the market price of gold ;-).
ReplyDeleteWake me up when Central Banks stop using gold as their reserve, and sell all of theirs. They are actually buying for the last 5 years.
Also understand the fact that gold is not used in the industry, is not a failure, it is a feature of gold. You can hoard gold without creating a scarcity. You can revalue gold 100 times, but no industry will suffer. You need to understand Gold is not a commodity, it is the best Store of Value there is. The current monitory system will survive only as long as people don't realize that gold is not a commodity.
Anand I think your numbers are wrong.
ReplyDeleteAnnual gold production is about 1000 mt (10^6 kg). Of this, about 50% is used in jewelry, 40% for investment and about 10% in industry. The main industrial use is electronics. So if we reckon on say 90 tonnes per year being used in electronics, that is probably a good ball-park figure.
If the whole of that were to be substituted by another alloy,then demand for gold out of annual production would fall by 10%. That's quite a big fall.
However, I agree with you that one must factor in the existing stock, none of which is used in electronics - it is all jewelry and investment. Once you do that, the effect of losing the electronic demand would be fairly minimal.
Aureus
This is great news!, the stock to flow ratio will increase!!
ReplyDeleteGuys, it is GOOD that gold is useless...
The process of applying Silver Maxphase is also a much more environment friendly process compared to gold chemical plating. There are no pollutions produced from the process, neither any need of aquiring licenses from goverments as it is for gold plating facilities.
ReplyDelete(Silver MaxPhase™ is deposited using dry and clean PVD
(physical vapor deposition) technology without involvement
of health threatening materials. In contrast to gold
plating Silver MaxPhase™ therefore does not require water
and waste treatment facilities or government licenses for
production lines.)
A replacement for gold? Is this for real? I do wonder if how will some long island gold buyer deal with this?..
ReplyDelete