Ch. 3— Minerals Supply, Demand, and Future Trends • 101 



States in 1986. Gold's resistance to corrosion makes 

 it suitable for electronics uses and dentistry. Gold 

 is also used in the aerospace industry in brazing 

 alloys, in jet and rocket engines, and as a heat 

 reflector on some components. Industrial and elec- 

 tronic applications accounted for about 35 percent 

 of 1986 consumption, dental 16 percent, and in- 

 vestment bars about 1 percent of the gold consumed 

 in 1986. Although gold is exchanged in the open 

 market, about 1.2 biflion troy ounces — one-third 

 of the gold mined thus far in the world — is retained 

 by governments. 



National Importance 



Gold is not a component of the National Defense 

 Stockpile, but the U.S. Treasury keeps a residual 

 stock of about 263 million troy ounces of buflion. 

 Although gold is no longer linked directly to the 

 U.S. monetary system, its value in the world eco- 

 nomic equation continues to be a hedge against fu- 

 ture economic uncertainties. Should the United 

 States or other major countries return to a regu- 

 lated gold standard, its price could be affected sig- 

 nificantly. Recently the United States issued the 

 Golden Eagle coin for sale as a collector's and in- 

 vestor's item, but gold is not normally circulated 

 as currency. 



Apparent U.S. consumption of gold was 3.3 mil- 

 lion troy ounces in 1986, whereas about 3.6 mil- 

 lion troy ounces were produced by U.S. mines. ^' 

 When U.S. primary industrial gold demand peaked 

 in 1972 at about 6.6 million troy ounces, imports 

 relative to domestic production were about 7 1 per- 

 cent. At the lowest primary demand level in 1980 

 (1 million troy ounces), net imports exceeded pri- 

 mary demand by nearly 2.6 million troy ounces.^* 

 Canada is the largest single source of imported gold. 



Domestic Resources and Reserves 



The United States gold reserve base is about 1 20 

 million troy ounces. Most of the reserve base is in 

 lode deposits. The world reserve base of gold is 

 about 1.5 billion ounces, of which about half is lo- 

 cated in the Republic of South Africa." Some off- 



shore placer deposits, such as those currently be- 

 ing experimentally dredge mined by Inspiration 

 Mines near Nome, Alaska, may be considered part 

 of the reserve base. 



Domestic Production 



Domestic gold production was at an all-time high 

 in 1986 with about 3.6 million ounces mined. 

 Lowest production within the last 10 years was 

 964,000 ounces in 1979. The Republic of South 

 Africa produced about 2 1 million ounces of gold 

 in 1986 — over 40 percent of total world production. 

 Compared to major gold mines in South Africa, 

 the U.S.S.R., and Canada, most existing and po- 

 tential U.S. gold mines are low-grade, short-life 

 operations with annual outputs between 20,000 and 

 90,000 troy ounces. "^ 



Future Demand and Technological Trends 



Generally, domestic primary demand for gold 

 has decreased steadily since its peak at 6.3 million 

 ounces in 1972. Nevertheless, the U.S. Bureau of 

 Mines forecasts that domestic gold demand will in- 

 crease at an average annual rate of about 2.4 per- 

 cent through 2000. Domestic primary demand is 

 forecast to be between a low of 2.8 million ounces 

 and a high of 4.6 million ounces in 2000, with the 

 probable demand at 3.7 miflion troy ounces.''' De- 

 mand in the rest of the world is expected to grow 

 at a slower pace of 1.7 percent annually through 

 2000. 



While other metals may substitute for gold, sub- 

 stitution is generally done at some sacrifice in prop- 

 erties and performance. Platinum- group metals are 

 occasionally substituted for gold but with increased 

 costs and with metals considered to be critical and 

 strategic. Silver may substitute in some instances 

 at lower cost, but it is less corrosion-resistant and 

 involves some compromise in performance and de- 

 pendability. 



^^J. Lucas, "Go\d," Mineral Commodity Summaries — 1987 (YJash- 

 ington, DC: U.S. Bureau of Mines, 1987), p. 62. 



"J. Lucas, "Go\d," Mineral Facts and Problems — 1985 Edition, 

 Bulletin 675 (Washington, DC: U.S. Bureau of Mines, 1986), p. 336. 



"Lucas, "Gold," Mineral Commodity Summaries — 1987, p. 63. 



"P. Thomas and E. Boyle, Jr. , Gold Availability— World, IC 9070 

 (Washington DC: U.S. Bureau of Mines, 1986), p. 38. 



"Lucas, "Gold," Mineral Facts and Problems — 1985 Edition, p. 

 335. 



