DENVER, CO — I often talk in these pages about the increased demand for gold I see as more and more investors realize the instability and enormous risks that exist with fiat currencies and the geopolitical picture. As events continue to unfold, I expect at some point in the not-to-distant future there will be a frenzy to buy gold on the part of those investors who suddenly realize their paper wealth may be in jeopardy.
As bullish as I am on gold under the above scenario, some new uses and demand for gold in the exciting field of nanotechnology are also of great interest to me.
Nanotechnology is something I have been studying for a couple of years. I am optimistic that if properly managed, this technology could bring about tremendous and wonderful future changes to our society in many areas.
But what is nanotechnology and how could it actually affect our way of life? The definitions below will hopefully answer those basic questions.
Basically, nanotechnology is the engineering of functional systems at the molecular scale. This definition covers the current work being done in the field and more advanced concepts that could be employed in the future.
In its original sense, "nanotechnology" refers to the projected ability to construct items from the bottom up, using techniques and tools being developed today to make complete, high performance products.
Nanotechnology is sometimes referred to as a general-purpose technology. That’s because in its advanced form it will have significant impact on almost all industries and all areas of society. It will offer better built, longer lasting, cleaner, safer and smarter products for the home, communications, medicine, transportation, for agriculture and industry in general.
Imagine a medical device that travels through the human body to seek out and destroy small clusters of cancerous cells before they can spread. Or a box no larger than a sugar cube that contains the entire contents of the Library of Congress. Or materials much lighter than steel that possess ten times as much strength. –U.S. National Science Foundation.
Like electricity or computers before it, nanotech will offer greatly improved efficiency in almost every area of life. But as a general-purpose technology, it will be dual-use, meaning it will have many commercial uses and also many military uses–making far more powerful weapons and tools for surveillance. Thus it represents not only wonderful benefits for humanity, but also grave risks.
A key understanding of nanotechnology is that it offers not just better products, but a vastly improved manufacturing process. A computer can make copies of data files–essentially as many copies as you want at little or no cost. It may be only a matter of time until building products becomes as cheap as copying files. That’s the real meaning of nanotechnology, and why it is sometimes seen as "the next industrial revolution."
My own judgment is that the nanotechnology revolution has the potential to change America on a scale equal to, if not greater than, the computer revolution. –U.S. Senator Ron Wyden (D-Ore.)
The future could be incredibly bright for nanotechnology, and it is a topic all investors should study. While the advanced concepts may take some time before they become reality, there are already some breakthroughs developing in this field that require gold and other precious metals.
Dr Richard Holliday (World Gold Council industrial applications manager) writes in the Rand Refinery 2006 Annual Report (PDF download 5 MB) that many of the potential new applications for gold are based on the developing markets for nanotechnology.
The report states that nanoparticles of the precious metals platinum and palladium are already used in significant quantities in automotive emissions control catalysts. The greatest annual demand for platinum and palladium come from their use in the catalytic converters in our cars. The precious metals used in this application take the form of tiny nanoparticles within the catalyst and generate over 200 tonnes of demand per year.
Also, gold in the form of nanoparticles (with palladium) has been used for a number of years as a chemical processing catalyst in the large-scale production of a substance called vinyl acetate monomer by companies such as Dow Chemical and BP. This is an important industrial chemical that is used as the basis for creating paints and adhesives. Since this process was first used it has generated a few tonnes of gold demand.
But now new uses for gold nanoparticles are making their way into areas such as air cleaning (including the removal of smells and poisonous carbon monoxide from rooms), pollution control, water purification, new medical technologies, fuel cells and the production of bulk chemicals. Companies such as 3M, BASF, and Johnson Matthey are currently experimenting with gold catalysts to develop other commercial applications as well.
I am of the opinion that nanotechnology will bring sweeping changes to our society and that more and more uses for precious metals will be found as new nanotech applications are developed.
The new industrial demand for gold created by these nanotech applications should be interesting to watch. How much future demand will be created by this sector is anybody’s guess, but given the current supply/demand picture for gold, any significant increase in demand should have a very positive effect on our price.
Coupled with gold’s investment appeal as honest money, nanotechnology promises to bring some exciting new demand implications that can only add to our already bullish stance on the yellow metal.
Isn’t it time to invest in some gold yourself while you can still buy it cheaply?
Until next time,