Recently, Louise Street, Senior Markets Analyst-World Gold Council (WGC) & Trevor Keel, Consultant-WGC released; You asked, we answered: How important is AI for gold demand? Demand for gold used in electronics peaked in 2010 at 328t, steadily falling to 249t in 2023.
In recent quarters, however, this sector has seen a modest recovery. And we’ve received a raft of questions around how much of that recovery can be explained by the growth of Artificial Intelligence, whether it will continue to drive growth in the sector and why exactly AI is an important emerging area of demand for gold.
Those analysts said about gold in electronics: a recent history; Gold plays a crucial role in electronic devices: it is an excellent conductor of electricity; it does not corrode; and its physical and chemical properties allow it to be manipulated into extraordinarily thin wires and reliable coatings.
These properties make it an indispensable component of the computer chips found in almost all electronic equipment. The surging price of gold between 2001 and 2011 (from ~US$250/oz to over US$1,800/oz) encouraged manufacturers in the electronics industry to look for ways to reduce their gold usage. These strategies involved both substitution (replacing gold with alternatives such as silver and copper) and thrifting (using smaller and smaller quantities of gold).
But retooling and process development does not happen overnight in electronics fabrication facilities; indeed, it is a multi-year process. And this shift coincided with consumer demand for ever more powerful, functional and reliable devices powered by advanced electronics and increasingly complex chips – think the proliferation of now-ubiquitous smartphones and the vast growth in laptops, smart TVs, electric vehicles…the list goes on. Manufacturers had to balance.
By explaining the role of gold in AI, they said, while the electronics industry still dominates demand for gold in the technology sector, it is far from the only application that relies on this precious metal.
Gold’s versatility and unique properties make it indispensable in various other areas of technology, 1: Medical devices, 2: Aerospace & 3: Clean technologies.
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