Precious Metals

Hoyt, C. D. ; Adamson, R. J. ; Herz, Nathaniel ; McQuiston, Frank W. Jr. ; O’Neil, P. H. ; Romanowitz, C. M. ; Shoemaker, Robert S.
Organization: Society for Mining, Metallurgy & Exploration
Pages: 36
Publication Date: Jan 1, 1985
1. INTRODUCTION In this section, precious metals are defined as gold, silver, and the platinum group metals comprised of platinum, palladium, iridium, osmium, and rhodium. If the first three years of the 1970's are the criteria, gold, silver, and platinum seem destined for a bright future. Gold advanced in price from the historic figure of $35 established in 1934 to over $100 per oz (1973). For the five years 1966 to 1970, silver consumption exceeded production by about 50%. The silver price appears to be definitely on the uptrend, and a price of over $3 per oz seems probable. On this basis (at 1964 costs) the United States has an estimated 5 billion oz of unmined silver. The fresh burst of interest in platinum with a surge of renewed price strength (end of 1972) is due to the activity in the automobile emission control area, where platinum re¬mains the front runner in the catalyst area. Some international financial experts believe that governments will not rush into reform of the monetary system, and "Special Drawing Rights" (SDR's) will gain increased standing as international mone¬tary reserve assets. Gold will continue to be reviewed as the ultimate store of value and will remain the global monetary base. Devaluation of the U.S. dollar caused by imbalance of import payments over ex¬ports is the basic reason that the price of gold will likely remain above the $90 per oz figure for the balance of the 1970's. Gold and silver usually occur intimately associated, and recovery methods are often closely related; however, they were assigned sepa¬rate chapters, because the major production of each metal is from ore deposits classified as either gold or silver. For example, the gold ore occurrences in South Africa, the world's leading gold producer, have a ratio of gold to silver of approximately 10 to 1. The ores at the Homestake Mine, Lead, S.D., the largest U.S. gold producer, are predominantly gold with a ratio to silver of approximately 5 to 1. Silver in each example is a byproduct. By this same classification, the largest U.S. silver producers are the silver ores of the Sunshine, Galena, and Lucky Friday mines in the Coeur d'Alene district, Idaho. However, the largest single-mine silver producer in the Free World is the Kidd Creek Mine at Timmins, Ont., where the occurrence is with sulfides of copper, lead, and zinc. Thus, the major gold production of the world is derived from those ores classified as gold ores; whereas, less than one-half of the silver production is from silver ores, and only a small percentage of the silver production is from gold ores. 2. GOLD Gold, the noblest of metals, has been mined for thousands of years. Its chemical symbol, Au, is derived from the Latin "aurum," meaning "shining dawn." A precious substance because it is one of the rarest metals, it has unique physical properties: it does not tarnish; it exceeds all other metals or alloys in malleability and ductility; it is a good conductor of electricity and is one of the most nonreactive metals. Its greatest strength is its indestructibility. It is the only metal mined at depths exceeding 10,000 ft. Since the early 1800s, its chief role has been as a medium of exchange, providing the basis for interna¬tional trade. In the past 15 years, however, gold has emerged as a useful industrial commodity. This role has been fortified by the estab¬lishment of a two-tier pricing system which maintains monetary gold prices at an established U.S. Government price, with industrial gold being priced higher by the free-market system. Occurrences and Production Native gold furnishes most of the world's production, since gold forms stable natural compounds with few other elements. Neverthe¬less, the metal is widespread with traces of it found in seawater and in the ashes of plants and animal material. Next to the native metal, the tellurides have been the most important gold-bearing minerals; these include calaverite, krennerite, slyvanite, hessite, and nagyagite. Native gold is invariably alloyed with more or less silver, but it is exceptional to find any other metal in the alloy. It is found in veins associated with quartz, calcite, alunite, other gangue minerals, and with various sulfides. Sulfide minerals in order of frequent associa¬tion are: pyrite, galena, chalcopyrite, sphalerite, arsenopyrite, tetrahe¬drite, and pyrrhotite. Small amounts of metallic gold are commonly disseminated through such sulfides. When considerable amounts of silver occur in gold, the mineral electrum is formed. In a few deposits, gold and mercury form natural amalgam. Native mercury is formed by weathering from cinnabar and other mercury minerals. Among the minerals sometimes mistaken for gold, pyrite, marcasite, and especially chalcopyrite may be men¬tioned. The flakes of biotite and other micas, especially when partially oxidized, also may imitate it closely. World gold reserves never have been estimated carefully. Esti¬mates indicate that present world reserves approximate I billion oz, of which about 60% occurs in South Africa and 20% in the USSR. World gold output is dominated by South Africa which produces two-thirds of the world's production from reserves that are adequate to maintain existing output levels. South African gold output comes from approximately 50 large underground operations that mine and mill 70 to 80 million tons of ore annually to recover 30 to 32 million oz of gold. The USSR is the second largest gold producer, followed by Canada and the United States (see Table 1). Gold production in the United States and Canada rose to high levels in the 1930's, following the increase in price from $20.67 to $35 per oz and with an abundance of good labor due to depression in other industries. Production of over 10 million oz in 1940 was behind only that of South Africa. World War II caused a precipitous drop in gold output due to the imposition of War Production Board Limitation Order L-208 issued in October 1942, which caused over 9,000 gold mines in the United States to shut down, most of which never reopened. The U.S. Treasury, which suspended purchases of newly mined gold in 1968, had been the sole buyer of U.S. produced gold since 1934. This created the two-tier pricing system, and in March 1972 the President signed into law a bill authorizing a $3 increase in the official price of gold to $38 per oz. In February 1973 the President ordered a second devaluation of the dollar, amounting to about 10% which raised the official price to $42.22 per oz. The erratic development of the gold market, which has seen the
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