The Golden Age of Tech

Technology will play a key role in driving precious metals demand in the coming years according to reports released this week by the World Gold Council and the Silver Institute.

The World Gold Council Gold Investor report for July focused on the growing use of gold in technology. According to the report, over the past decade, the tech sector accounted for more than 380 tons of gold demand annually. That’s 13% ahead of central bank purchases during the same time period. The demand for the yellow metal for tech applications logged its sixth consecutive quarter of gains in Q1 2018.

“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,” WGC CEO Aram Shishmanian said.

Gold has primarily been used in electronics. You’ll find the yellow metal in phones, cars, televisions and hospital monitors. Gold’s unique physical properties make it an ideal material for a wide range of electronic applications. It doesn’t corrode or tarnish like other highly conductive metals such as copper and silver. It is also a soft, pliable material and can be easily drawn out into narrow wires or plated into thin coatings.

Gold demand in the electronics sector fell off in the first half of this decade as manufacturers sought out less costly substitutes for gold bonding wire (GBW). But demand rebounded last year. The electronics sector used 265 tons of gold in 2017, a 4% increase from 2016. It marked the first year-on-year percentage growth since 2010.

“There are signs that conditions are improving for gold. GBW offtake recovered last year, driving the first increase in electronics demand of this decade, and Metals Focus expects this result to be repeated again in 2018, reflecting strong markets for flash memory, automotive electronics, and various sensors. Within the memory sector, NAND flash memory provides an effective solution, both in terms of cost and performance, for solid-state storage (non-volatile storage that does not require power to retain data). GBW is the material of choice in NAND flash packaging so the robust growth of data storage in consumer electronics and enterprise servers has translated into rising gold demand.”

Demand for gold is also growing in the healthcare field. One example that has been reported recently is tiny. wearable optical sensors made with gold that could help doctors diagnose and manage health issues in real-time. Gold nanoparticles are being used to treat cancer and to help diagnose other diseases. Gold may even help restore eyesight. Scientists have even developed tiny robots made from the yellow metal that can clean pathogens out of blood.

There are other promising tech advances using gold. Johnson Matthey, a specialty chemical and sustainable technology company, has pioneered the use of gold as a catalyst in the production of polyvinyl chloride (PVC). The process could replace mercury, a metal toxic metal that causes significant health problems.

“Due to the sheer scale of the industry, significant quantities of gold will be required to convert all the reactors in China to mercury-free ones. In 2017, for example, there were more than 80 producers, whose annual PVC production totalled more than 17 million tons.”

According to the WGC, “Gold’s contribution to the technology sector underpins its value in the modern world and its ongoing role as an industrial commodity.”

We generally think of gold as an investment as well as money, but it is increasingly being used in technology and industry. Demand for gold in the tech sector has been growing since 2016. That growth will likely continue to accelerate due to new innovations. Increased demand in tech and industrial sectors will likely put upward pressure on overall demand for gold in the future.