‘The magic thing about gold': Why do we still covet (and hoard) it

The Age

19-07-2025

The man is dressed head to toe in what looks like silver tinfoil. He gestures to his audience: it's time. Before him is a ceramic cauldron filled with molten metal bubbling at 1100C. On some unseen command, the furnace, its cavity not much bigger than a garden bucket, begins to tip towards us and viscous liquid slumps over the front lip. Out it comes, cascading down a stack of moulds like an infernal chocolate fountain, each cast the size of a house brick.
After a couple of minutes, the silver man prises out a few bricks, now solid, and dunks them into a trough of water, where they boil away with a burst of steam.
This is the business end of a complicated process that sees rock dug out of the ground here at the Fosterville mine, near Bendigo in central Victoria, and refined into one of the world's most precious commodities.
Slowly, as it's whacked into shape with a hammer and scrubbed with a wire brush, the first cooled 'brick' begins to lose its char. No longer black, it starts to shine. It's now clearly a rough-hewn block of the coveted substance that has fuelled innumerable conquests, funded wars and bankrolled currencies; that's locked away in mysterious vaults, worn, fashioned, eaten, worshipped, forged, turned into teeth and watches and wedding rings and sometimes flamboyantly stolen.
The brick we have before us is now clearly gold … approximately 12 kilograms of nearly pure, solid gold. It's placed before us. Go on, somebody offers, pick it up.
Why do we love gold so? Why has its price gone on such a record tear? What is Donald Trump's obsession with it?
What is it about gold?
El Dorado. Goldfinger. The Midas Touch. Jason's Golden Fleece, guarded by a dragon. The (fictional) Italian Job. The (real) Brink's-Mat Heathrow robbery, the biggest gold heist in living memory. Gold has forever held a place in popular culture that is unlikely to be usurped. Ancient Egyptians called gold the 'flesh of the gods'; Aztecs called it the 'sweat of the sun' (the Incas, with their more practical bent, probably valued fine textiles more).
On their western conquests, the Spanish first found gold on the Caribbean island of Hispaniola in 1494, then pillaged their way through South and Central America, stealing what today would be priceless artefacts to melt into coins and ingots. Some of the Spanish loot ended up at the bottom of the ocean, like the estimated 7 million gold pesos that sank in the belly of a galleon called the San Jose off Colombia in 1708, a haul which, combined with other treasures, has an estimated value today of around $26 billion.
By 1560, tales of a magical land called El Dorado had captured the public imagination, a place so rich in gold that the king was apparently dusted with it every morning in lieu of a bath. It was desperately sought by Spanish and British adventurers in a fever dream of rivers and mountains, what we now call the Amazon Basin. They never did find it.
Australia, fittingly, had its own Eldorado – a town near Wangaratta, named for its proximity to the region's enormous gold deposits. The rush to unearth them fuelled a mania for more than 40 years, first triggered by the discovery of gold near Bathurst in NSW, in 1851. Within 20 years, Australia's population had increased four-fold (to about 1.7 million) as would-be gold millionaires flocked to our shores, lured by the easy pickings of so-called alluvial gold, the flakes and dust that could be easily panned from creeks (and the very occasional nugget big enough to stub your toe on).
Within a few years, gold from Victoria alone accounted for more than a third of the world's supply. The boom's last major discovery was in Kalgoorlie, in 1891, which is still drawing 'gold bug' enthusiasts today (more on that below). The rush left behind a handful of millionaires, tens of thousands of disappointed prospectors, and much fine 'boom era' architecture – those stately banks and municipal halls that ornament once-thriving towns. Eldorado, once a bustling gold centre, now has a population of a few hundred.
Still, as a universally recognised, if sometimes gauche, symbol of status, gold has retained its lustre, from Tutankhamun's ornate death mask to today's solid gold Rolex. Libyan dictator Muammar Gaddafi hoarded nearly 150 tonnes of it; former Turkmenistan president Saparmurat Niyazov had a $20-million golden statue made of himself that was rigged to rotate such that his face was always in the sun; Iraqi dictator Saddam Hussein had a golden toilet brush (among other gilded monstrosities).
Elvis had a 24-carat gold-plated grand piano. Louis XIV's Versailles palace was smothered in gold leaf, and Donald Trump loves the stuff nearly as much the Sun King did. Trump was famously gifted a golden golf club by former prime minister of Japan Shinzo Abe, and has filled the Oval Office in the White House with golden tchotchkes: picture frames, trophies, statuettes, even drink coasters.
Gold does have practical uses. It can protect astronauts from deadly rays, as a reflective foil in their visors. There's some in your phone, where it's an excellent conductor of electricity. Jewellers like it because it's malleable enough to be moulded into interesting shapes (like a traditional Chinese wedding bangle, artfully fashioned into an interlocked dragon and phoenix) or beaten into atomically thin sheets. 'It's got these fantastic properties,' says Charles Butt, an expert in geoscience and an Honorary Fellow with CSIRO. 'You can go on smoothing it out and rolling it out more than any other metal.'
Silver, also historically valuable, has an Achilles heel, he says: it tarnishes. 'Gold doesn't. That's the magic thing about gold that people found: it stays gold.' Non-toxic and soft, gold is also great for filling teeth, squidging into cavities as you chomp down on it.
Why is gold valued as an investment?
For millennia, gold has been used as a portable (and smugglable) store of wealth, a cushion against currency devaluations (especially in volatile countries), considered by some investors as a 'safe haven' in turbulent times. All of which, as with the value of the US dollar, has to be largely taken on trust. Says Charles Butt: 'It's always been valued for its rarity and the fact that it doesn't actually dissolve in many things, it's quite stable, it doesn't corrode. You can make beautiful objects out of it and those have some form of value because people think they're pretty, or admire the craftsmanship or whatever. But, basically, it's valuable because you think it's valuable.'
'Not so many people, I think, trust Bitcoin yet. But clearly people trust gold. I mean, gold has been around for forever, right?'
Gold is certainly costly to dig up and process: it's estimated that the total quantity ever mined is just over 215,000 tonnes, much of that extracted since 1950. But other metals are much rarer. Supplies of Osmium, the heaviest (densest) of all the stable metals (22 times the weight of water and twice that of lead) are only a tonne or two worldwide each year (some of it for fountain-pen nibs), compared to around 3000 tonnes of gold. But have you ever heard of it, let alone desired it?
Gold is typically around 100 times more costly than silver, which is about 20 times more abundant in the Earth's crust. Platinum, another dense, rare metal (almost as rare as gold) has industrial applications and is desirable in expensive jewellery and has, historically, been pricier than gold, but has slipped behind dramatically since 2020; gold now costs triple its also-ran silvery cousin.
Global uncertainty probably has had a lot to do with it, suggests Dirk Baur, an expert in gold and cryptocurrencies at the University of Western Australia. 'When we look at the global financial crisis or COVID, then stockmarkets fall and the Aussie dollar also falls with the stockmarkets. And in these periods, gold, in Australian dollars, shoots up,' he tells us. 'Not so many people, I think, trust Bitcoin yet. But clearly people trust gold. I mean, gold has been around for forever, right?'
Loading
Gold, as per tradition, is valued by the troy ounce – named for the medieval French trading hub of Troyes, and translating as 31.103 grams – by the US dollar, and the carat (spelled karat in the US, hence '24k' or '14k') Priciest is 24-carat gold, 99.9 per cent pure and buttery yellow; lower carats, such as 14-carat, mean the gold has been alloyed with other metals, such as nickel and silver, to make it cheaper, to change its colour to silver-coloured 'white gold' or to make it harder-wearing – pure gold is soft enough to scratch with a fingernail. (Slightly confusingly, 'carats' are also used to value precious stones but refer to their weight not their purity.)
In Australia, we can buy and sell physical gold in the form of jewellery, in tablets of various weights (an ounce trades at about $5200) or in 1-ounce coins (such as those made by the Canadian or Perth mints and South African Krugerrands, whose price can vary depending on the maker); or via a physical-gold-backed exchange traded fund (ETF), which effectively gives you a share in a store of gold without having to store it yourself.
'You can pick up that little bit of gold from under the pillow and, you know, you can walk into Paris the next day and sell it for 90 per cent or more of its value no questions asked.'
The price of gold has spiked significantly in 2025, from $4200 in January to $5100 in July. This was likely driven by factors such as Trump's tariff threats to the world economy, the ongoing war in Ukraine, conflict in the Middle East, increased buying by central banks and recent enthusiasm for the metal among small investors in China, where demand is up 12 per cent year on year, fuelled by jewellers hawking gold bars, coins, even pebble-sized beans.
Everyday Iranians have also been hoovering up as much gold as they can get their hands on as a hedge against inflation and their struggling national currency, the rial. Now the world's fifth-largest consumer of gold bars and coins, in the 12 months to March, Iran imported a record 100 tonnes (and possibly even more through shady channels).
In fearful times, says specialist geologist Neil Phillips, gold can be seen as a last resort if you have to, unfortunately, flee your own country. 'You can pick up that little bit of gold from under the pillow and, you know, you can walk into Paris the next day and sell it for 90 per cent or more of its value no questions asked. It's highly transferable.'
In Syria, there's been a sudden boom in small-time exploration, usually with metal detectors, following the collapse of the Assad regime and a new mania for antiquities and buried treasure. In Sudan, meanwhile, there's a darker side to the shiny metal, where its mines are helping to fund a civil war, a major source of income for the warring parties, according to Chatham House. Gold in Sudan, reports The New York Times, 'is the prize for rampaging fighters and mercenaries who have robbed so many banks and homes that the capital now resembles a giant crime scene, with fighters gleefully vaunting piles of stolen jewellery and gold bars on social media.'
Where does gold come from and who's looking for it now?
Originally, gold came from the stars, one of the many elements that formed the primordial Earth amid enormous heat and pressure. It was first carried around underground in liquids, mingling with other minerals, until it was eventually pushed closer to the surface in some places, where it cooled and settled, usually in pockets of ore. A tiny fraction formed into nuggets but most of it remained embedded in surrounding rock as particles, alloyed with smaller quantities of other elements, often silver.
'Now the gold price is $5000 an ounce. I went out on the weekend with a mate for two days and we got $10,000 of gold.'
At first, it was within relatively easy reach. When gold was discovered near Bathurst, prospectors first went looking for nuggets. In 1869, Cornish miners John Deason and Richard Oates discovered a whopper barely an inch below the surface at their property in Moliagul, near Dunolly in Central Victoria. Deason was digging up his yard with a pickaxe when he hit something solid. Thinking it was a rock, he loosened the dirt around it and was amazed – in the words of the local paper – to have found 'a giant lump of gold'. Named the Welcome Stranger, it was one of the largest nuggets ever found, at 2520 troy ounces, or 78 kilograms, worth just under £10,000 at that time – a fortune.
Oates went on to buy a valuable property; Deason became a successful businessman supplying equipment for gold mining. But sensational nugget finds were the exception: prospectors then turned to gold flakes and dust in creek beds, which could be collected by panning the metal free from the sandy substance that surrounded it, and digging for the stuff in makeshift mines.
Hobbyists still pan for gold, or hope that metal detectors will pick up nuggets somehow missed by the gold-rush hordes. Jacob Lynch-Harlow, a geologist based in Kalgoorlie, helps would-be prospectors with the technical and legal demands of pegging out mining sites and also searches for gold himself, often on historic workings from long-gone miners. 'We're basically picking up where they left off because they couldn't get it out, they couldn't process it,' he tells us. 'Maybe it wasn't economic at that stage. But now the gold price is $5000 an ounce. I went out on the weekend with a mate for two days and we got $10,000 of gold.' Kalgoorlie, he tells us, is experiencing something of a modern-day gold rush. 'It's like a mass exodus from the eastern states,' he says. 'Good luck getting a spot in the caravan park.'
Australia is the world's third-largest producer after China and Russia, supplying some 300 tonnes a year. Unromantic as it is, little comes from hobbyist panners; virtually all of Australia's gold emerges from operations such as Fosterville, a subsidiary of the Canadian-based listed mining company Agnico Eagle Mines. In 2016, Fosterville miners hit upon what turned out to be one of the world's richest deposits, a lode about a kilometre deep that they called the 'Swan Zone'. The quartz they dug up literally shone with gold flakes. 'We think we've got more [deposits like Swan] but it's going to take some patience and a bit of perseverance and the science of geology to find them,' says Ion Hann, vice president of Australian operations.
These days Fosterville's rock is less generous, much of its gold invisible. They dig up the rock (blasting the subterranean 'working faces' with explosives twice a day to dislodge it in slabs), ferry the debris in huge trucks to the surface (Fosterville is a drive-in 'underground access' mine, not one with lift shafts and tiny underground trains) then separate the gold from the rock in a series of stages (one of which sees the ore fed to a giant machine like a tumble dryer filled with softball-sized ball bearings to smash it into fragments).
At the bottom of one of the spidery tunnels, we pick up a lump of quartz that glints with at least one or two flakes of … surely, that's gold?
For our visit underground, we pile into an industrial-spec LandCruiser that takes us into a series of pitch-black interconnecting tunnels, winding through switchbacks and loops, with enough width for just one vehicle (a clever Wi-Fi system warns of oncoming traffic, the protocol being to give way to those ascending, usually by hurriedly reversing back into a side tunnel). There are mines at Mount Isa, Gwalia and Stawell that have reached greater depths – Fosterville currently bottoms out around 1.5 kilometres.
At the coal face, as it were, miners drill holes into the rock where explosives will be inserted later while others dig out the debris from earlier blasts. Many work in air-conditioned cabs – it's between 26 and 30 degrees down here and unexpectedly steamy in places (think Darwin in the rainy season). Lingo abounds: the trucks that scoop up the rock are 'boggers', the underground lunchrooms are 'cribs', younger workers are 'nippers'.
Rescue pods, for escape in the event of a fire or a collapse, look like shipping containers, with bench seats, food, water and enough oxygen to last until their occupants get rescued (all of us have portable rubber respirators, too, in a metal case clipped to our sturdy miner's belts). Finally, at the bottom of one of the spidery tunnels, we pick up a lump of quartz that glints with at least one or two flakes of … surely, that's gold?
In the days of Australia's gold rush, miners had to figure out ways to separate out the gold bound to other minerals, such as the glittering seams lodged in quartz. One method was to use mercury, a technique dating back to the 10th century: you combined the mercury with crushed ore, the mercury adhered to the gold particles then you heated the mercury, which boiled off, leaving just the gold. The catch: mercury was toxic, both to the miners, who inadvertently rubbed it into their skin and breathed the poisonous fumes, and as a heavy metal dispersed into the environment.
Loading
'That stuff is still sitting there in creeks these days,' says Neil Phillips. It still happens in less regulated countries such as Brazil and Venezuela, Charles Butt tells us. 'Enormous destruction is being done in rivers by itinerant miners,' he says. 'They first concentrate gold by panning gold-bearing earth or river sand, and then drop the panned residue into the mercury which selectively removes even the smallest gold particles. They can then boil off the mercury to retrieve the gold.' Then they either try to collect the mercury (which is itself costly) to re-use it or let some escape. 'When they do that they poison everybody, including themselves.' Gold is also often found with naturally occurring arsenic, which, unsurprisingly, needs to be dealt with expertly.
Fosterville uses a series of physical, biological and chemical methods to release the gold from the rock, which it says accord with a comprehensive environmental management plan. 'We minimise our footprint here as much as we can,' says Hann. 'Do the locals feel when we blast? Yep, they do. There's no doubt about it. We can't eliminate all impacts. There will be some. Farming has impacts, OK. But we are managed, as an industry – managed really well.'
Fosterville's case, common to most miners, is that it provides a social good – jobs for 800 or so people, support for the local economy, royalties for the state, taxes for the Commonwealth and donations to community causes. Some residents are nevertheless concerned that plans to continue mining could contaminate groundwater and impact the nearby Campaspe River, plans that have been approved by the state government but that now need sign-off from the federal government.
In March, meanwhile, the owner of one of the country's largest gold mines, Cadia in Orange, was fined $350,000 for breaching air pollution regulations, following complaints from nearby communities who believed dust from the mine was affecting their health. Newmont Corporation pleaded guilty to exceeding concentration limits for airborne solid dust particles.
Where are all the gold bars, or bullion, kept?
In February, Trump asked a bewildering question. Of Fort Knox, the granite, concrete and steel art-deco pile in Kentucky where the US government currently stores 147.3 million or so troy ounces of gold – about half of its bullion reserves – Trump asked, 'How do we know for sure the gold is really in there?' He demanded somebody go and check. Much head-scratching ensued. Treasury Secretary Scott Bessent later said that 'all the gold is present and accounted for'.
Trump is not the first to air doubts about the US government's gold holdings, which are the world's largest: a conspiracy theory emerged in the early 1970s that they had long been faked, prompting an invitation to a congressional delegation and media outlets to see the gold for themselves. Republican congressman Ron Paul then revived the idea in 2011, saying that some people believed the gold had been secretly sold, or that the bars on display were actually made of tungsten (a much cheaper but still heavy metal) that had been gold-plated for effect – straight out of a Bond movie.
For much of the 20th century, America's gold reserves were there to guarantee the value of the dollar. To make sure the Federal Reserve had enough gold on hand to meet its obligations, in 1933 President Franklin Roosevelt took the extraordinary measure of banning individual ownership of most gold, in particular investment-grade coins and bars, forcing the populace to exchange it for cash. Failure to do so was punishable by 10 years in jail and a fine (though dentists were excepted). This was eventually repealed in 1974, after President Richard Nixon had removed the link between the dollar and gold holdings.
Loading
Today, while central banks still hoard gold, it is largely to hedge against inflation and currency fluctuations, as an alternative to holding US dollars, or for reasons that seem more to be about psychology than anything else. ' To hold gold as a cent­ral bank cre­ates con­fid­ence,' said Carl-Lud­wig Thiele, a board member of Germany's Bundes­bank, the world's second-largest holder of gold, in 2013. '[We] build trust at home and have the pos­sib­il­ity to exchange gold at short notice into for­eign cur­rency abroad.' Poland's central bank has been buying up big in recent years, which has increased its 'prestige', said its governor, Adam Glapinski, in May.
Australian currency hasn't been backed by physical gold since 1932 but our Reserve Bank still owns 80 tonnes – about three grams for each of us – worth around $13 billion. Virtually all of it is stored at the Bank of England in London, one of the main international storage depots, with some 400,000 bars under lock and key. One vault near London, the Financial Times discovered in 2016, boasts an electrified roof, blast doors that can stand up to rocket-propelled grenades and fingerprint sensors that can tell if you're trying to gain access, Mission Impossible -style, with somebody else's severed digit.
In June, two men were jailed for stealing a $9 million solid gold (18-carat) toilet.
Consequently, thieves have found it's easier to strike when the loot is in en route, as per 1968's The Italian Job, when Michael Caine's band of merry men rob a delivery van and entertainingly escape in a convoy of Mini Coopers (only to be foiled by the sheer weight of their haul). Two years ago, a real gang made off with 419 kilograms of gold from an airport in Canada after forging a waybill document, which seemingly authorised them to take delivery (most have subsequently been caught and charged).
There are exceptions: in June, two men were jailed for stealing a $9 million solid gold (18-carat) toilet plumbed into Blenheim Palace in England (it hadn't, incidentally, once belonged to Saddam Hussein but was an ironic artwork by the Italian artist Maurizio Cattelan, more recently known for his work Comedian, the banana taped to a gallery wall that sold for nearly $10 million).
The biggest gold heist in recent decades, though, is the Brink's-Mat robbery of 1983, named for the security firm responsible for securing the bullion at a warehouse near Heathrow Airport. An armed gang gained access to the storage unit, hoping to find cash and valuables, instead stumbling on a cache of gold bars worth some $200 million in transit on their way to Hong Kong. As television dramatisation The Gold recently recounted, getting the loot turned out to be the easy, if violent, part. Disposing of it, equitably sharing it and getting away with it turned out to be near impossible – most of the crew ended up dead or in jail, the Midas Touch in action again.
And the bar of gold we held at Fosterville? The first sensation is the sheer weight. Like it's glued down. Think of picking up a suitcase using a finger and thumb. Then there's the dawning realisation of what this lump of metal is: how much it is desired, sought after at often enormous personal cost, yet here it is, more gold than any normal person will ever see in their life, in the palm of a hand. A tangible, emotional store of wealth, at today's prices worth not far off $2 million. One can see the appeal.
This Explainer was brought to you by The Age and The Sydney Morning Herald 's Explainer team: editor Felicity Lewis, left, and reporters Jackson Graham, centre, and Angus Holland, right. For fascinating insights into the world's most perplexing topics, sign up for Felicity's weekly Explainer newsletter. And read more of our Explainers here.