The Mining Stage
Gold production begins at mining operations worldwide. According to the World Gold Council, approximately 3,000 tonnes of gold are mined annually from operations across every continent. Major producing countries include China, Australia, Russia, the United States, and Canada.
Mining methods vary based on deposit type. Open-pit mining extracts gold from large surface deposits, while underground mining accesses deeper veins. Placer mining recovers gold from stream beds and alluvial deposits. Each method produces ore containing small concentrations of gold mixed with rock and other minerals.
The ore is processed on-site to create a gold concentrate. This involves crushing, grinding, and chemical processes that separate gold particles from surrounding material. The concentrate, sometimes called dore, typically contains 60-90% gold along with silver and other metals.
The Refining Process
Refineries transform gold concentrate into pure investment-grade metal. The two primary refining methods are the Miller process and the Wohlwill process. The Miller process uses chlorine gas to separate impurities, producing gold of about 99.5% purity. The Wohlwill process uses electrolysis to achieve 99.99% purity or higher.
Major refineries include operations in Switzerland (Valcambi, PAMP, Argor-Heraeus), Australia (Perth Mint), and North America (Royal Canadian Mint). These facilities process gold from mines worldwide, transforming raw concentrate into standardized refined gold. The London Bullion Market Association maintains a list of accredited refiners whose products meet strict quality standards.
Quality control during refining involves multiple assays (chemical tests) to verify purity. Accredited refiners maintain documentation tracing each batch from source to finished product. This chain of custody supports the integrity of the final bars.
Fabrication into Bars
Once refined, gold is fabricated into bars of various sizes. For 1 oz bars, refiners use either casting or minting methods. Cast bars are made by pouring molten gold into molds, producing bars with a slightly irregular surface. Minted bars are cut from rolled gold sheets and pressed with dies, creating a smooth, precise finish.
Each bar receives stamps indicating weight (1 oz or 31.1g), purity (.9999), the refiner's hallmark, and often a unique serial number. Some refiners add security features such as holograms, microtext, or proprietary packaging that helps verify authenticity.
Bars are then packaged, often in tamper-evident assay cards that include matching serial numbers and certification of weight and purity. This packaging protects the bar and provides documentation that supports resale.
Why Production Matters for Investors
Understanding production helps explain the premiums on physical gold. The mining, refining, and fabrication process involves significant capital equipment, energy costs, skilled labor, and quality control. These costs, along with distribution and dealer margins, make up the premium over spot price.
Production quality also affects resale. Bars from LBMA-accredited refiners are accepted globally without additional testing. Bars from unknown sources may require assay before purchase, reducing their liquidity. For buyers focused on eventual resale, choosing well-known refiners simplifies the process. You can learn more about what makes a quality 1 oz gold bar in our refiner comparison.