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December 9, 2020

Turab Musayev Discusses The Value Chain of Gold

A Concise Overview of the Process by Which the Metallic Element Gold is Brought to Its Finished State

Gold has always been deemed a valuable substance. This has been the case throughout the entirety of recorded human history and has extended across civilizations, from the Incan Empire in western South America to Pharaonic Egypt to the dynasties of ancient China. Initially prized for its malleability, and hence, its usefulness in creating ornate sculptures and jewelry, gold soon evolved into one of the world’s earliest currencies, acting as a medium of exchange and facilitating the trade of goods within and between disparate societies. 

Presently, although gold no longer acts as a bulwark backing the currencies of various nations, it retains value as a sort of alternative or emergency measure of wealth. That is why, generally, when financial markets lose faith in paper or digital currencies, gold commodities tend to experience a commensurate increase in value. While everyone is aware of gold’s worth, very few know the particulars of its value chain. To address that knowledge gap, Turab Musayev, a business professional who specializes in commodities trading, provides a concise overview of the process by which gold is brought to its finished state.

Where Is Gold Found?

“To begin with, the gold is not formed by any known natural planetary process the way, say, diamonds are the result of highly pressurized carbon over time, or fossil fuels are the result of the decomposition of organic matter over time” states Musayev. “Rather, gold is an atomic element that occurs naturally in the Earth’s crust”. The most recent theories as to the origins of gold concern supernovas and the collision of neutron stars. That means that all the gold that exists in the world was created billions of years ago, and any future gold that might be created anywhere near Earth won’t likely occur for millions of years. That being the case, as far as human beings are concerned it is a finite resource, and thus scarce, lending itself perfectly to its role as the default currency of choice throughout much of history.

Gold was one of the first metals ever to be mined. Finished products made from gold appeared in Africa, Europe, and Asia as far back as 4700 BCE, indicating that gold mining took place even before that. Later, records show that the ancient Romans used hydraulic mining methods like ground sluicing—a process wherein flooding is used to separate dense gold fragments from lighter waste rock—to extract gold from loose sediment deposits in numerous locations across the Roman Empire. 

The Mining Process

These days, mining for gold can take many forms. After an area is properly surveyed and found to contain gold, those in charge of the mining enterprise decide on how best to remove it based on the surrounding geology. If the gold deposits are found encased in solid rock, as is the case with most of the world’s supply, open-pit mining is often the preferred method of extraction, but underground mining featuring networks of tunnels and shafts is still widely practiced, too. 

Placer mining is the technique used to recover gold accumulated amongst relatively loose material that can make traditional mining difficult and dangerous. It almost always involves the use of water-based systems, such as sluicing or dredging. Some small-scale placer mining is still done by panning, as well. Gold ore processing is a chemical-based process developed in the modern era wherein sodium cyanide is mixed with a finely ground rock to bond with any gold that is present. Zinc is then added to the resulting gold cyanide solution, followed by sulphuric acid, which ultimately creates a relatively pure gold sludge. Lastly, gold is sometimes harvested as a by-product of mining other resources. For example, large copper mines sometimes recover substantial amounts of gold as a secondary effect of their mining efforts.

Once successfully removed from the Earth’s crust, gold is subjected to a multi-step procedure that involves crushing it and whatever another rock sediment is still attached to it down to the size of sand grains. In a process known as ‘leaching’, chemical solutions are then applied to the result, and the whole mixture is put into a smelter and subjected to extreme heat. Gold, which is heavier than all the other substances involved, sinks to the bottom of the smelter and coalesces, while everything else (known as ‘slag’) is discarded. After that, the gold is further refined through the application of pressure, additional chemicals, even more, extreme heat, as well as electricity. At the end of all this, what is left is gold bullion. Sometimes one further procedure called ‘pyrometallurgical chlorination’ is conducted as well, which makes use of chlorine to entice base metals and other impurities from the bullion, and produces gold that is anywhere from 99.5-99.7% pure.

According to Turab Musayev, “once the desired level of purification is achieved and verified by a team of expert metallurgists, the gold bullion is once again melted down, poured into metal or ceramic containers, and cast into ingot molds. High-powered, technologically-sophisticated machinery is then used to press and strike these molds into long, thin strips. After that, a more precise machine called a ‘gauging mill’ is employed to form these strips into the exact thickness prescribed for gold bars, and then individual bars are cut. These are then inspected a final time to ensure the highest quality controls have been observed, and, depending on whether they have been created in a bullion manufactory or a government mint, the bars are then either stamped with an official seal or simply certified for shipment.”

That, in a nutshell—from the explosive crucible of creation inside a supernova to sitting in the bar from atop a storage skid inside a central bank vault—is how gold is brought to its finished state.

Turab Musayev is a business professional specializing in the energy industry and commodities trading. 

Originally born in Ganja City, Azerbaijan, Turab Musayev studied at American University in Baku from 1996-2000, graduating with a degree in Business Administration. From 2004-2005, he continued his education in the United States, attending the Mason Business School at the College of William and Mary. Turab finished his academic training at INSEAD Business School, dividing the year between France and Singapore, and earning a full-time Masters of Business Administration degree in 2006. 

Upon entering the professional world, Turab Musayev started in the Finance and Operations Division of British Petroleum Azerbaijan. After a few years, he accepted a position as a Strategy Analyst at Marathon Oil, an energy company based in Houston, Texas. From there, Turab moved back to British Petroleum, this time to the London, UK office, where he applied his expertise in the Integrated Supply and Trade Division. Between 2007-2012, he was recruited to work at the Gas and Power Trading Desk at Merrill Lynch, also based in London. He later went on to lead Merrill Lynch’s power trading expansion in Italy and Eastern Europe and was eventually promoted to Vice-President of the Commodities Division. Since then, Turab has returned to London, having accepted the roles of Asset Manager and Director of Commodities Trading at Macquarie Bank.

Turab Musayev is fluent in Azeri, English, and Russian. His interests outside of work and academia include tennis, boxing, and spending quality time with his wife and two children.

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