During the first week of October, some interesting news came out about two Michigan State University professors who had successfully used bacteria to produce legitimate 24-carat gold from a highly toxic solution of gold chloride. It wasn't long before conspiracy theories started circulating among certain gold followers. Instead of being a global plot to devalue gold, or even a valid production option, this looks instead to be just an interesting scientific development and nothing for investors of the precious commodity to worry about.

Not Exactly New News
Perhaps the most important thing to realize about the story of "scientists using bacteria to make gold" is that it's not exactly new information. Scientists have known for a while that certain bacteria can essentially draw metals out of solutions and concentrate them into nuggets or other deposits. The same bacteria have been found on gold nuggets from sites thousands of miles apart and scientists have since figured out how the bacteria are able to "make gold."

What's more, the idea that gold can be teased from gold chloride is also not new. Add gold chloride to an acidic solution with potassium cyanide and run a current through it, and the gold will deposit on the cathode; this is how electroplating is done. Likewise, while medieval alchemical texts are notoriously unreliable, it would seem that more than a few alchemists thought they had discovered how to produce gold when in fact they were precipitating gold out of various solutions.

What makes the Michigan State news actually newsworthy is that they were able to replicate the process in a lab. Moreover, it turns out that the little critters (cupriavidus metallidurans) are even stronger than previously thought and able to survive and thrive in incredibly toxic environments.

Not Exactly Practical, Either
Contrary to some of the wilder claims that this is some international plot to undermine the gold market, it in fact seems like this process is not even close to commercial viability. It is true that gold (III) chloride does occur in nature, is highly toxic and isn't especially useful from a commercial perspective. However, it's not like there are large lakes of unusable gold chloride just sitting around, nor are bacteria the only option for exploiting it (using hydrogen peroxide or ferrous ions being other options).

In fact, one of the researchers involved (Adam Brown, an associate professor of electronic art and intermedia) acknowledged that the process is not commercially viable, and in some respects is more like an artistic project than a scientific project (it was, in fact, part of an exhibit called "The Great Work of the Metal Lover").

So, to summarize, we have two university professors using a substance (gold chloride) that scientists already knew can be precipitated into gold and a bacteria that scientists knew precipitated metals (including gold) out of solution and did so - for an art exhibit. That is not exactly what I would call a brilliant scheme to destroy the international gold market or gold standard on the part of nefarious fiat money advocates.

Science Today, Technology Tomorrow?
While the idea that vials of bacteria are going to replace Caterpillar shovels in the gold mining trade is pretty far-fetched today, the reality is that gold mining is a hard job. Most gold miners never actually see any gold at all; tiny flakes of gold are found amid tons of rock and companies have to use various concentration or leaching techniques (including the use of cyanide) to extract the gold from the ore. Perhaps then, somewhere far down the line, engineered or modified bacteria could be used as a part of a cheaper or safer process for concentrating gold.

Likewise, heavy metal contamination/pollution is a significant environmental danger and one that is not easy to clean up. Once again, maybe somewhere far down the line a company can utilize these bacteria in such a way to precipitate out the metals and help accelerate the decontamination process. There are, after all, microbes that break down petrochemicals, and there have been some commercial-grade experiments aimed at evaluating the use of bacteria as tools in oil spill clean-ups or as a part of early-warning/detection systems for spills.

The Bottom Line
Those worried that modern alchemy might undermine the value of gold can relax. Gold is a scarce, expensive to produce metal and is going to remain so for the foreseeable future. Even if scientists can now replicate the natural process by which certain bacteria form gold nuggets from solutions containing gold, it doesn't change the fact that there aren't vast deposits of gold chloride to exploit, nor any sort of commercially viable bioreactor process yet. Consequently, gold is highly likely to remain a scarce and precious metal.

Related Articles
  1. Options & Futures

    Why Gold Is No Longer the Currency King

    Although a gold standard seems like a good idea, looking at its role in U.S. history reveals that it may not be the beacon of stability that it claims.
  2. Mutual Funds & ETFs

    Five ETFs for Contrarian Investors

    Here are five ETF ideas that can be used by the contrarian investor.
  3. Chart Advisor

    Global Weakness Evident By These 3 Commodity Charts

    Weakness in the metals shown on the charts of these three ETFs suggest that the bears are in control of the momentum. We'll take a look to see if there is a reversal in sight.
  4. Investing

    Why is Gold a Counter Cyclical Asset?

    Gold is widely considered a safe haven during market turbulence. History has proven gold performs counter cyclically to the state of the U.S. economy.
  5. Stock Analysis

    Is Now the Right Time to Buy Gold Mining Stocks?

    Examine the current case for buying gold stocks, and learn the reasons why gold and mining stocks may be set to begin a new rally in the near future.
  6. Investing Basics

    Learn How To Trade Gold In 4 Steps

    Trading spot gold or gold futures, equities and options isn’t hard to learn, but the activity requires skill sets unique to these markets.
  7. Economics

    The Effect of Fed Fund Rate Hikes on Gold

    Explore the historical relationship between interest rate increases and the price of gold, and consider what effect a fed funds rate hike might have on gold.
  8. Professionals

    Why Near-Retirees Shouldn't Sweat the Volatility

    With the stock market bumpy, some folks nearing retirement might be nervous. Here's how to create some wiggle room for your portfolio.
  9. Professionals

    Fund and ETF Strategies for Volatile Markets

    Looking for short-term fixes in reaction to market volatility? Here are a few strategies — and their downsides.
  10. Chart Advisor

    Despite Unchanged Rates, Gold Set For A Move Lower

    Despite the Fed's news of leaving interest rates unchanged, 3 charts are suggesting that gold prices are setting up for a move lower.
  1. What techniques can be used for hedging exposure to the electronics sector?

    Hedging exposure to the electronics sector offers an investor a way to insulate his portfolio from losses during periods ... Read Full Answer >>
  2. What techniques are most useful for hedging exposure to the banking sector?

    The banking sector moves in the same direction as the broader market, but its volatility is much lower. The sector's stability ... Read Full Answer >>
  3. Is credit a form of fiat money?

    To understand why credit is a form of fiat money, one must first understand what money is. At its most basic level, money ... Read Full Answer >>
  4. Why should you invest in tangible assets?

    Savers who deliberately buy tangible assets for investment purposes value their tangible goods as a form of value diversification ... Read Full Answer >>
  5. Is fiat money more prone to inflation than commodity money?

    The value of fiat money is based largely on public faith in the issuer. Commodity money's value is based on the material ... Read Full Answer >>
  6. Is all paper money fiat money?

    The majority of currency on paper is considered fiat money. Fiat money is money that can be used as tender but does not have ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center