$1200

Per ounce. Gold has set a new record- at least as measured in dollar value.

Gold struck $1,201.63 (£722.69) an ounce on the London Bullion Market, after striking historic peaks over recent weeks.

The dollar index fell 0.8% against a number of currencies as fears about the Dubai debt crisis waned across international markets.

Again, from my elementary understanding of economics, this is due primarily to the decreasing value of the dollar, not to increasing demand. Given the factors that are depressing the dollar, for example the enormous and chronic US trade deficit, the value of gold may not go higher, but seems likely to remain elevated for quite some time.

That does not mean it would be a good time to buy gold; I have no idea regarding nor qualifications whatsoever to discuss investment strategies. But from a geological and economic perspective, it does mean that I'd be willing to bet lots of minerals groups are prospecting for and scouring potential ore deposits, and revisiting known deposits that previously haven't been worth developing and extracting.

Trying to coax numbers out of my memory hole is always a dubious business... I don't really know how much to trust my recollections. But I do feel pretty confident that when I took the class called economic geology about 25 years ago, our prof, Cy Fields, told us that not too long ago, gold needed to be in the neighborhood of an ounce of gold per ton of ore to be profitable. With the development of new refining technologies and techniques (cyanide leaching, for example), for larger deposits, it could be extracted at a gram per ton. In round numbers, that's a decrease from one part in fifty thousand to one part in a million.

According to Bullion.com,

Gold's average concentration in the Earth's crust is 0.005 parts per million. The technology of extraction is expensive primarily because the process always requires gold mining companies to manipulate large physical quantities of ore for small results. The energy required to heave, grind and process ore is itself valuable, as are the chemicals used in the process, and this places a lower limit on the quality of ore which can be profitably worked in the gold mining process.

At different points concentration of minerals within the earth's crust varies from their average, and it is those variations which produce workable ores for gold mining. Iron, for example, accounts for an average 5.8% of the content of the Earth's crust. It needs to be concentrated by natural variations to about 30% to be considered an ore, indicating a required geological concentration of about 5 times. A lower grade gold ore would contain something like 5 grams per tonne (5 parts per million). So gold ore needs to be concentrated by about 1,000 times above its average dispersion to become viable for gold mining.

(Note the above is a commercial website intended to draw investors interested in buying, selling and investing in gold; unless you know a lot more than I do about investment, and can make a realistic cost-risk analysis, you'd do well to simply read the information there. That said, there is a great deal of information to interest those curious about the intersection of geology and economics.)

The "ore-grade" (extractable at a profit) level is higher than I'd remembered by a factor of five, but nevertheless, five parts per million is a low concentration. The rough rule of thumb is that 20 drops of water makes about a milliliter. One million drops of water would thus be 50 liters, or 13.2 gallons. Imagine five drops of something else mixed into that, and you've got the ratio about right.

So while this isn't the greatest news for the dollar, it's not bad news at all for exploration geologists.