The official website of precious metals market maker SchiffGold published an article titled “How Nvidia Uses Gold” (How Nvidia Uses Gold) on Tuesday, which explores the close connection between this first chip and precious metals. The following is the full text.

Founded in 1993, Nvidia is a technology company that makes GPUs (graphics processing units) and other products. It initially made products specifically for the video game industry to aid in 3D rendering. Some loyal gamers may have bought this company's products, and many others haven't even heard of this company.

However, as the rise of ChatGPT sparked a boom in artificial intelligence (AI), Nvidia has become a regular customer in the headlines because its products can also be applied to AI. From the fourth quarter of 2022 to the fourth quarter of 2023, the company's revenue increased 265%.

Ten years ago, Nvidia's market capitalization hovered around $10 billion. In 2016, it was around $50 billion, and by April 2024, it had surpassed $2 trillion. Motley Fool, a well-known American investment media, included it in the list of the world's third-most valuable listed companies, after Apple. Nvidia's current market capitalization is more than five times that of Walmart and is one of the best performing stocks in the past few years.

It's undeniable that stock markets (especially technology stocks) sometimes think differently from traditional investments and stores of value (such as gold and silver). However, the link between precious metals and the tech industry is often more intense than some might think.

Precious metals are an important part of many technology products. Nvidia uses a variety of precious metals to make its products — including gold, as well as tantalum, tungsten, and tin. SchiffGold has long been reporting on how demand for industrial silver is expected to rise, but many high-tech industries are also dependent on the industrial use of gold.

GPU chips are made of gold and other metals such as nickel, silicon, and copper because they are highly conductive. Of course, the monetary value of gold motivates people to minimize industrial use of gold, but the chemical properties of gold are still very useful, so manufacturers continue to use gold in chip manufacturing, and sometimes even in internal computer circuits and switches, despite the high cost.

As competition in the GPU industry becomes more intense, and the price of GPUs may rise driven by advances in AI, the correlation between the cost of raw metal in GPUs and the overall cost of gold will become smaller. This means manufacturers can use more gold in their products without drastically increasing the cost of GPUs and other products.

Maybe that's why some savvy investors are betting on gold and AI companies at the same time.

A prominent example is former Soros deputy and billionaire Stanley Druckenmiller (Stanley Druckenmiller), who moved his asset allocation from big tech companies to AI and gold.

Currently, gold is less used in the high-tech industry than it is used to invest in or make jewelry, but the interesting thing is that the newest and most advanced technology in humankind — AI — has instead relied on this ancient currency.

The strength of gold depends on its history, present, and future. Its value stems both from its sparkling appearance and its use in jewelry and decoration, and from its unique chemical properties, which power the world's greatest technology.

The preciousness of gold prompted businesses to seek alternatives, but its natural properties made it still used as an important component of computers and GPUs despite its high cost.