What will now replace gold?

A payment for wars, the jewellery of the ancients, but now the world's most precious metal has lost its sheen


o be told you were "worth your weight in gold" used to be a tremendous compliment. Now you can't be so sure. Plenty of other things, some quite surprising, command a higher price than gold, per ounce or gram, now that the price of the metal has hit a 20-year low in London. Last week it dropped to $261.20 an ounce after the Bank of England, on the Chancellor's orders, sold off 25 tons of our reserves, making it cheaper than some caviares, 90-year-old whisky, rhino horn, or musk.

While the Chancellor Gordon Brown may have decided that we can sell 415 - out of 715 - tonnes of the Bank of England's gold reserves and replace gold ingots with foreign currency, thought to be more dynamic and useful, others are less impressed. Gold reserves were never meant to be useful. hey started as a means of paying for wars: and gold remains the ultimate security in times of distress.

his is one reason why, even though its price may slide against more fashionable commodities, gold will never lose its shine in the eyes of most of the world's population. he metal was first extracted and worked into jewellery at the time of the ancient Egyptians, though it really took off with the Spanish conquest and looting of South America.

Many civilisations embrace the idea of the Golden Age, when all was perfect, but the real Golden Age has been the 20th century, with the opening of the vast South African mines that now produce about a third of the world's supply, and the discovery of a huge new range of uses for a metal that is at once an essential industrial resource and an attractive consumer item.

As a personal adornment it is prized all over the world, especially in cultures that don't share our nervousness about ostentation. And in many places, notably India, it has a religious significance. In China it has a long association with happiness. hey like it in the Middle East, too.

his makes it uniquely tradeable. It has always been a currency - not something that can be said for the elaborate products dreamed up to tempt Western investors. Its value is universally understood: some world travellers always wear a gold Rolex watch, on the grounds that hospitals won't worry about their ability to pay their medical bills if they have an accident.

Gold doesn't really earn money, either for a country or an individual investor, but it's a security. When the Korean economy developed a gaping hole last year, the government simply rounded up as much as it could of the populace's own gold. he hole was plugged.

he Chancellor's move has caused consternation, not only among South African gold producers whose miners will have to take the consequences of the drop in their product's price. Jewellers and precious metals traders are alarmed, and not a little bemused.

"It may just be that Mr Brown thinks it should be consigned to the dustbin of history," said Rhona O'Connell, a precious metals analyst with Hoare Canaccord in the City. She points out that Brown has strongly supported the IMF's own gold disposal programme, which has also hit the price.

"But it's an investment in the true sense of the word," said O'Connell. "It won't necessarily make you any money, but it will sure help you when you are being shot at." In times of affluence and in anticipation of a crisis, people buy gold. When the crisis hits, they sell it. hen they buy it back.

And this is not only a Far East phenomenon. In the US, sales of pure gold coins are said to have doubled last year, probably in anticipation of "Y2K" and the Armageddon that so many Americans fervently anticipate.

Still, for all gold's virtues, it is no longer among the most expensive commodities in the world. he precious metals of the platinum group have surged past it, driven by increasing demand and a gratifyingly dodgy supply.

he outright winner is probably rhodium, at about $900 an ounce. Platinum, which was known in South America before the Conquistadors but considered useless, goes for $346. Palladium, which comes from Russia, costs $317.

hese metals are used now in catalytic converters. "hey offer an extremely efficient way of cutting out hazardous toxic wastes going into the air from vehicles," said Jeremy Green of Metals Bulletin, trade paper of the industry. "And they are mined very erratically. he fundamentals are very strong: a lot of people are sticking with that."

he "fundamentals" - the underlying economic realities of supply and demand - are important to investors, large and small, but they don't necessarily explain the prices paid for things. Finished diamonds can fetch about pounds 25,000 per carat (a carat being 0.2 of a gram). hat makes them at least 10,000 times as expensive as pure gold, a price that reflects considerable human skill as well as the tight controls over their supply.

But despite the crisis, many will stick with gold. As Rhona O'Connell said: "Gold is the only money that is no one else's liability. It hasn't got `I promise to pay the bearer on demand'. It is not subject to political foibles and vicissitudes". Which is why most of us would rather have a couple of gold bars under the bed than a bundle of crumbling euros.



ALAN SHEARER: pounds 6000/oz

DIAMONDS: pounds 14.9m/oz

DEGAS PAINING: pounds 8m/oz

RHINO HORN: pounds 340/oz


$346.50 or pounds 221/oz


$317 or pounds 202/oz


$900 or pounds 573/oz

source: Metals Bulletin


100.10 carat diamond sold at Sotheby's, Geneva in 1995 for $16.55m or pounds 14.9m/oz

source: Guinness Book of Records


Fragments go for $50/g or approx pounds 900/oz

source: Natural History Museum


Degas' Danseuse au Repos sold for pounds 17,601,500 at Sotheby's on 28 June 1999 or approx pounds 8m/oz

source: Sotheby's


90-year-old Macallan from Fortnum & Mason

pounds 20,000 for 75cl or approx pounds 750/oz

source: Fortnum & Mason


1787 Chateau Lafite sold at Christie's in 1985 for pounds 105,000/bottle or pounds 4,000/oz

source: Guinness


Almas yellow caviare from albino sturgeon

pounds 354/oz

source: Guinness


sold for pounds 15m or approx pounds 6,000/oz


Rhino horn

pounds 12,000/kg or pounds 340/oz

source: Customs & Excise


Bile from bear's gall bladder (used in Chinese medicine) up to $2,000/gram or pounds 36,000/oz


From deer for perfume

$50,000/kg or pounds 900/oz

source: Customs & Excise

Have you tried new the Independent Digital Edition apps?
ebookA delicious collection of 50 meaty main courses
Life and Style
ebookNow available in paperback
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Ashdown Group: C# Developer - Kent - £43,000

    £35000 - £43000 per annum + Benefits: Ashdown Group: C# and .Net Developer - n...

    Guru Careers: Digital Marketing Exec / Online Marketing Executive

    £35 - 40k: Guru Careers: Our client has a new role for a Digital Marketing Exe...

    Ashdown Group: Marketing Manager (B2B) - Romford - £40,000 + car

    £35000 - £40000 per annum + car and benefits: Ashdown Group: Marketing Manager...

    Ashdown Group: Helpdesk Analyst - Devon - £20,000

    £18000 - £20000 per annum: Ashdown Group: Helpdesk Analyst - Devon - £20,000 ...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'