Technology is transforming the way we live, work and play, changing almost every aspect of our world, from industry to financial services to healthcare. Gold plays an integral part in this societal shift.
Over the past decade, the technology sector has accounted for more than 380 tonnes of gold demand annually, a significant figure in itself and almost 13% ahead of central bank net purchases during the same period. Yet gold’s role in this vibrant and growing industry is broadly unrecognised and often misunderstood.
This edition of Gold Investor focuses on technology, analysing gold’s current use and future potential across a range of applications.
To date, gold has primarily been associated with electronics, used in devices such as phones, cars, televisions and hospital monitors. In the first part of this decade, electronics demand faltered, as manufacturers sought less costly alternatives. Now, however, demand is rising again, testament to gold’s unparalleled properties of high conductivity, resilience and flexibility (see “Gold and the electronics sector“).
Even as electronics demand rebounds, a number of other forward-thinking industries are turning to gold.
In healthcare and biotech, there is growing excitement about the potential of gold nanoparticles in such wide- ranging areas as diagnostic testing, gene therapy, skin reconstruction, and antiviral drug production. And, as Canadian biotech firm Sona Nanotech highlights, gold nanoparticles may soon play an integral role in cancer treatment too.
Speciality chemicals and sustainable technologies company Johnson Matthey has pioneered the use of gold as a catalyst in the production of polyvinyl chloride (PVC). This would replace mercury, which is extremely toxic and associated with serious health issues, when not handled with exceptional care. Using gold therefore, could prove highly beneficial and Johnson Matthey is actively working to drive this change.
Gold’s contribution to the technology sector underpins its value in the modern world and its ongoing role as an industrial commodity.
However, gold remains a valuable financial asset too. Dr Andrew Sheng, Distinguished Fellow of the Asia Global Institute, advocates that central banks should increase their gold holdings, as the world moves from an international monetary system dominated by the US dollar to a multi-polar currency system. Dr Sheng points to gold’s multiple benefits as an asset that delivers long-term returns while reducing risk and increasing liquidity.
Brunello Rosa, economics expert and CEO of Rosa & Roubini Associates, also subscribes to the benefits of gold within a diversified portfolio. Assessing the political situation in Italy, he predicts that volatile times lie ahead and suggests that gold could be a useful asset to hold in such an environment (see: “Italy and European political risks suggest defensive positioning“). And Matthew Turner of Macquarie also points to the stability of gold in recent years – in stark contrast to many other asset classes.
Across the world, gold is increasingly entering the mainstream and becoming part of the global dialogue among policy-makers, opinion formers and leading institutions. Our inaugural Investment Summit, held in New York earlier this year, analysed key challenges within the investment community and gold’s potential contribution as a long-term, stable, store of value. Some of the central themes are discussed in “Seeking solutions to investment challenges“.