Gold’s Role in the Third Industrial Revolution

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In recent years, talk of the Third Industrial Revolution has reached the mainstream. Much of this discussion comes from economic and social theorist Jeremy Rifkin. He wrote the book on it, literally. His 2011 release, The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy, and the World, lays out his theory on how the global economy will change in just a few decades.

He presents this idea as one consisting of five “pillars.” That is, the Third Industrial Revolution will will consist of:

  1. Renewable energy
  2. Micro-power plants
  3. Hydrogen storage technologies
  4. Internet-enabled energy grid
  5. Electric transport fleet

Rifkin explains, “The establishment of a Third Industrial Revolution infrastructure will create thousands of new businesses and millions of jobs and lay the basis for a sustainable global economy in the 21st century.” With such far-reaching implications, it seems reasonable to expect that the planet’s natural resources will undoubtedly have a role in this transformation. Here, we look at gold’s role in the Third Industrial Revolution.

A Renewable Resource

Recycled gold comprises an increasingly large portion of the global supply. Research from The World Gold Council shows that “Whilst newly mined gold has averaged approximately 70% of total supply over the last 10 years, annual mine production has been consistently less than 2% of total stocks of above-ground gold.” This trend fits squarely within the above pillars of the coming Third Industrial Revolution. Gold is constantly recycled. Moreover, recycled gold now makes up approximately 30 percent of the total annual supply according to the same body of research.

Lower Emissions

Given it’s scarcity, gold is extremely emission-intensive. Research from the World Steel Association, Global Market Intelligence, and others, show that gold represents a significantly greater emission intensity per unit mass than other raw materials like aluminum, copper, zinc, and lead. However, additional research shows that the total greenhouse gas emissions from gold are actually less than that of coal, aluminum, and steel. How is this possible? Because gold deposits and sources are so rare, there are far fewer mining operations. Therefore, the relative emissions are lower than those stemming from major industrial materials.

A Key Player in a Low-Carbon Future

Additional research from The World Gold Council finds that “if an investor holds an investment in newly-mined gold for nine years or more, the annualized GHG footprint of the investment is lower than the annual GHG footprint of an equivalent-value investment in the S&P 500.” This finding is important because more investors today are seeking opportunities to make the savings grow in ways that are sustainable and environmentally sustainable. In fact, in a recent study from Morgan Stanley, researches found that “71% of investors seek sustainability.” This drive not only comes from a sense of responsibility for the planet, it comes from the belief that companies with a focus on the environment will use their resources efficiently, thereby minimizing waste and boosting profitability. It’s not surprising to learn that green initiatives  “saved $422 million and reduced electricity use by 5.8 billion kWh over a 12-year period,” according to Morgan Stanley.

The Third Industrial Revolution is coming. Be prepared.