All that is rare is precious is the saying you have no doubt heard many times. Gold, known for its beauty, rarity and safe haven, is expected to experience a sharp decline in production in the coming years. However, there is no question of desperation for all investors in the precious metal, since many alternatives exist to continue producing or recycling gold. But, all other things being equal, don’t its features remind you of a famous cryptocurrency? Zoom on the gold market, its value, characteristics, production and future trends to offset the decline in production of the precious yellow metal. As a bonus, we even present you a new project put together by VeraOne, which we told you about last week.
Warning : This article is brought to you by the company Vera One. Crypto investments are risky by nature, do your own research and invest only within the limits of your financial capacity. This article does not constitute an investment invitation.
Gold is expensive because it is scarce: true or false?
You all noticed it, the price of gold is rising sharply, in particular because of the current economic situation but also because the yellow metal tends to become increasingly rare. Indeed, the main safe haven since the dawn of time, gold impresses with its beauty, its rarity but also its density, which makes it possible to contain a great value in a tiny volume. To look at it more closely we would try well a comparison with a well-known cryptocurrency.
However, why is gold so scarce? And how does this characteristic make it a safe haven in which investors believe in a continuous rise in its value?
We often say the value of gold increases in proportion to the onset of stock market crises or currency devaluations like the dollar and the euro. But the phenomenon is not always true. It may well be that in the years to come, the value of gold continues to rise due to its scarcity and declining production. The World Gold Council, the world gold observation agency, predicts that gold production will drop by 20 to 25% in the coming years. Humanity would have already extracted 197,576 tons of gold in its history, and there would be “only” 50,000 tons of gold left underground, or about 15 years of operation at its current pace, despite efforts to find new gold deposits. This shock of supply vis-à-vis demand could therefore be boost the gold price to historic levels, the future will tell.
Considering that the demand for gold tends to increase, we understand better why all analysts are trying to find new alternatives to the production and search for gold.
Today, world demand for gold fluctuates around 4,355 tonnes distributed as follows :
- 2,107 tonnes of gold for sectors related to jewelry;
- 326.6 tonnes of gold for the technology sector ;
- 1,271.7 tons of gold for financial gold ;
- 650.3 tonnes of gold for central banks.
But who owns the gold?
The top 10 biggest gold producers
While gold is now produced in more than 90 countries, 10 of them are establishing themselves as true gold rush empires.
Today, five countries alone hold half of the world’s natural gold resources still available on earth : Australia (10,000 tonnes), the Russia (5300 tonnes), South Africa (3200 tonnes), United States (3000 tonnes), and Indonesia (2600 tons).
As for the list of the great magnates of gold production, we find in first place the Middle Empire which extracts 420 tonnes from its mines and is also the number one consumer of gold, particularly in the jewelry and bullion sector. Australia, Russia and the United States followed. It’s not a big surprise when you look at the financial powers of the world today.
But, as we said before, the production of gold in the world tends to decline and all eyes are already on the future, but also on more eco-responsible solutions.
So let’s take a closer look the alternatives permitted today to rethink gold production, particularly from a new ecological prism.
Gold, a new asset in the circular economy?
Several possibilities are now available to companies wishing to produce gold differently, in particular to limit the ecological risks involved in gold mining. If we consider that the extraction of 20 grams of gold releases 450 kg of Co2, uses 50,000 liters of water and at least 150 liters of fuel, no one can ignore the benefits of recycling the precious yellow metal.
Firstly, more and more companies are interested in the mining of precious metals like the gold contained in our electronic devices, even if the technologies used are still quite complex. This industrial and technological challenge is of particular importance for the years to come when it represents only 10% of gold recycling today.
Secondly, the redemption of gold, which has existed for hundreds of years, now allows France to use more than 20% recycled gold, mainly from jewelry, coins or various debris recovered by pharmacies. It should be noted that in this case, the beautiful yellow metal retains all its characteristics and remains the same without knowing the slightest alteration. In 2019, 1,728 tonnes of gold was recycled, but this figure has nevertheless been declining steadily in recent years.
In addition, other less “green” alternatives exist but concentrate the attention of traders: 10 billion tons of gold are said to be at the bottom of the seas and oceans today. Unfortunately, current techniques do not allow easy access to this windfall. However, the subject is fascinating. Most recently, the inhabitants of Port Moresby, the capital of Papua New Guinea, saw equipment unloading gold from copper and silver from underwater. So, the underwater gold rush for tomorrow? Not so sure since environmental activists and protectors of the environment are already protesting against this new possibility offered for rare metals. To be continued …
Finally, NASA already has in its boxes a future adventure to search for precious metals in space on a planet called “Psyche 16” and who would conceal 631 quintillion euros of precious materials, or 84,000 billion euros for each landowner, enough to see things in a big way. To infinity and beyond !
Gold is therefore present in limited edition on Earth and the trend is more towards a circular approach which consists in recycling gold for obvious reasons of respect for human rights and nature, than in the search for gold. like the gold miners of the time. This, without counting on the future, which will allow us to travel in space and collect raw materials. But it must be said that many analysts try to compare gold to the new digital gold: Bitcoin (BTC) and more generally to cryptocurrencies. Even if central banks tend to still use gold, no doubt they will quickly look into Bitcoin which has the possibility of becoming real augmented gold.
Yellow gold or “augmented” gold?
At Cryptocurrencies we like illustrations that allow you to think “out of the box” and we have chosen to show you the value of gold thanks to an illustration that makes it possible to realize very quickly the infinitely small that the precious metal represents in size, but the infinitely large that it can represent in value.
Gold is therefore rare but efficient to store since, as these illustrations show, it does not take up much space. But is it that much comparable to Bitcoin?
In terms of scarcity, yes. As we have seen, gold is rare and its production is sharply declining, despite an environmentalist momentum, its scarcity allows it to have an increasing value.
As for Bitcoin, only 21 million exist on Earth (and in the Universe), and that is unlikely to change thanks to the consensus of network users, unless the majority of the network votes to go against their own interests, which seems rather unlikely.
Indeed, on October 31, 2018, everyone remembers the publication of the Bitcoin white paper by the famous Satoshi Nakamoto. Qualified as a rare asset in the same way as gold or silver, its mysterious creator largely insisted on its rarity, its value and its intrinsic characteristics which make it a rare and therefore precious asset:
“As a thought experiment, imagine that there is a metal as rare as gold but with the following properties: a boring gray as a color, which conducts electricity poorly, which is not particularly strong [..], which is useless in a concrete or ornamental way [..] but that he has a magical property that others do not have: that he can be transported through a medium of communication ”
But let’s look a little further: if man is going to search for gold in space in 2150, Bitcoin should remain Bitcoin and there will be only 21 million left. Only time will tell if Bitcoin reaches the same store of value as gold and stabilizes.
And you, rather gold or bitcoin?
So faced with the eternal question, some answer that gold is the best safe haven, others announce the heyday of Bitcoin in the face of the risk of falling classic currencies due to the health crisis.
These are the questions many of you asked themselves when the Covid-19 crisis was in full swing:
In this context, some took the opportunity to develop a unique value proposition on the market by choosing the best of both worlds: this is the case of VeraOne, the physical gold backed stablecoin that allows you to tokenize gold in a simple and secure way.
VeraOne X FeelMining a gold wedding ring
Combining gold and cryptocurrency, an old dream come true? In any case, that is what two young French shoots are announcing: on the one hand Veraone – that we no longer present – at the beginning of VRO, the first stablecoin backed by physical gold ; the other, FeelMining, the investment platform dedicated to mining and masternodes. An alliance that is making sparks in the crypto sphere and in the old world of the yellow metal since it is now possible for you to obtain a cashback in gold to reward your loyalty!
This cashback offer is only available if you have a Gold or Premium account, But the offer is in gold: you thus indirectly hold gold while continuing to invest in cryptocurrencies, something to delight the undecided.
Throughout this forum, you have been able to discover the qualities that made gold this much sought-after asset. But you have also seen that Bitcoin tends towards these same qualities. If you also still hesitate between gold or cryptocurrencies, or simply want to learn more about alternative investments and the history of precious metals, visit the alternative investment forum every week!
Karen is passionate about new technologies in general, and blockchain in particular! Finding out about trendy news, the latest market developments and the treasures of the ecosystem, she is happy to help you discover this universe in all its colors.