New Internationalist

Stop the gold rush!

September 2014

Richard Swift argues that our appetite for the shiny metal is both pointless and dangerous.

Imagechina/Corbis
Hey, big spender! China’s first gold vending machine – it dispenses coins and bars – landed in busy Wangfujing Street, Beijing, in 2011. Each withdrawal is capped at a million yuan (about US$162,000) worth of gold. Imagechina/Corbis

Weird stuff, gold. While it is almost without any practical use, it has become a standard of value that people are willing to kill and die for. It suffuses our language as some undefined aim we should all be striving to achieve – there’s ‘good as gold’, ‘going for gold’ (in Olympics parlance), gaining the ‘gold standard’ or sometimes just a simple exclamation of ‘gold!’ to emphasize excellence. Anything with which one can make money gets compared to gold: thus water becomes ‘liquid gold’ or oil ‘black gold’. At a more banal level, we all can feel blessed to pass under the golden arches of McDonald’s to get our burger and fries.

We still have most of the gold that’s ever been panned or dug up. Still we move heaven and a lot of earth to get more. Exact figures vary, but a semi-official estimate claims there are now 171,300 tonnes of gold above ground (although some believe we have 16 times that). Whatever the amount, it doesn’t take up much space because it is so dense. At the semi-official estimate, if you placed it all in a giant cube it would measure just 20 metres on each side. At 16 times, the cube shoots up to 50 metres high.1

We painstakingly dig gold out of the ground in some remote corner of the globe, then dutifully put it back under the ground in some vault or safe storage facility. What’s the point?

We are now mining and stockpiling more gold (2,500 tonnes a year) than ever before, mostly for ‘investment’ purposes in bullion, coins, and seldom-worn jewellery.2 We painstakingly dig it out of the ground from an open pit mine, usually in some remote corner of the globe, then dutifully put it back under the ground in some vault or other safe storage facility. What’s the point, you might ask?

Some vaults accumulate more than others, of course. The Federal Reserve vault in Manhattan is said to hold between 20 and 25 per cent of all the gold ever found.3 Many nation-states as well as private investors keep some of their bullion here. So, say the Bundesbank wants to buy gold from the Bank of England, the yellow stuff need never leave the Federal Reserve vault. A little team of security guards just loads it up and takes it from the British pile to the German pile. Again, you might ask: what’s the point?

Worship and scepticism

The roots of gold worship run deep in culture and history. It is usually associated with power. In Exodus even God gives intricate design instructions for how gold is to be used to decorate the places in which to worship him. On the other hand, the quick-tempered Moses was not at all pleased when he came down from the mountain with the 10 commandments and found the Israelites worshipping a golden calf. He immediately (presumably obeying God’s wishes) burned the calf in a fire, ground it to powder, scattered it on water, and forced the Israelites to drink it.4

Moses’ actions speak to another hidden strain in Western and perhaps other cultures – a scepticism about gold, almost an anti-gold. The worshipping of the golden calf has come down to us as a kind of unseemly adoration of wealth or ‘mammon’. The Persians went so far as turning it into a means of execution when they forced their captive, the gold-loving Roman emperor Valerian, to swallow molten gold.

Ionut David/Alamy
One of numerous protests across Romania – here in Brasov, September 2013 – against government support for a plan to open Europe’s biggest open-cast goldmine in the small Carpathian town of Rosia Montana. Ionut David/Alamy

More recently there were those great Hollywood films like Lust for Gold and The Treasure of the Sierra Madre. Who can forget the gold-crazed stare of Humphrey Bogart as the paranoid prospector Fred C Dobbs in the latter? The film was based on the novel by that mysterious anarchist writer B Traven, who had spent years observing how the gold lust of whites was tied to the misery of Mexico’s indigenous population.

Then there was Lenin, the Russian Bolshevik leader, who proposed that gold be used to decorate public toilets in revolutionary Russia. Or the brilliant 20th-century economist John Maynard Keynes who thought of it as an ‘archaic relic’ that needed to be completely severed from currency value and public finance. These days Keynes has mostly got his way since ‘Tricky Dick’ Nixon cut the US dollar loose from being pegged to gold back in 1971.

But even as a sideshow, gold searching and hoarding continues to plague the world. Today, digging up of the hyper-valued metal by rapacious mining companies (charmingly referred to simply as ‘miners’) meets resistance from local communities in alliance with environmentalists in almost every corner of every continent. The widespread use of toxic chemicals, the destructive nature of huge open-pit mines, the despoliation of precious water resources, a boom culture of thuggery and corruption all put meat on the bones of the case against gold.

It was the Lydians, back around 600 BC in what is now western Turkey, who first used gold as currency instead of mere decoration. This made the demand for the stuff almost infinite. The egotistical political class quickly inscribed their own image on the currency – a practice they have continued to the present day.

Public decorative gold today is an artefact of church and state. It tints domes and cupolas of parliament and mosque, adorns the crowns and sceptres of royalty, the braids and medals of military rank, is part of the trappings of most official rituals – essential to the sad pomp of power. This was well caught by the British colonial administrator Sir Frederick Hodgson when he went to Kumasi in 1900 to teach the gold-rich Ashantis of Ghana who was boss. Ashanti kings had for centuries perched on a golden stool that symbolically marked royal power. In writer Matthew Hart’s account:

‘Where is the golden stool?’ Hodgson
demanded. ‘Why am I not sitting on the
golden stool at this moment? I am the
representative of the paramount power; why
have you relegated me to this chair?’
5

High wire capitalism

Part of the appeal of gold is caught up with a swashbuckling history of ruthless pirates and conquistadors as they chopped down whoever stood between them and the shiny metal. The romance is sustained today by a kind of extreme capitalism of high-risk mining companies, often owned by dare-devil entrepreneurs in search of that big score. It’s a world of high-stakes trickery, price fixing, bribery and shell games – hostile takeovers and stock scams are a regular part of the ‘business model’. Gold is often found by small mining companies known as ‘juniors’ with only limited capital to start mining. The juniors then tend to exaggerate their ‘finds’ in order to attract the attention of ‘majors’ who they hope will get into a bidding war that allows the little guys to cash in big time.

These days, levitating at the ridiculous price of well over $1,000 an ounce, gold is an extremely lucrative business. Back in the day when gold was linked to the value of currency it was believed to provide (at $35 or so an ounce) an anchor to prevent runaway inflation. For many central bankers and conservative economists this was holy writ. So much so that they were willing to plunge their fellow citizens into economic despair in order to ensure gold stocks. The depression of the 1930s is the classic case where governments cut desperately needed relief and refused economic stimulation in order to ‘protect’ their gold-backed currencies. Oddly, when the connection between gold and currency was finally severed by the Nixon administration, currencies were not affected by severe inflation but the price of gold went through the roof.

The sky-high price ensures that gold and crime are now joined at the hip

At current prices gold is becoming very troublesome. Remote mining sites have now become ‘economical’, endangering indigenous communities from Andean Latin America to central Africa. Previously abandoned old mines are being reopened across the world. Canada, New Zealand, Spain, California, Egypt – in almost every corner of the globe – mining scars that have previously healed are having their scabs ripped off.

A classic example is Romania, where the controversial Rosia Montana mine in the western part of the country is in prospect of becoming Europe’s biggest goldmine. Goldmining had taken place there since Roman times but ceased decades ago. Now those gold-mad Canadians, this time led by Gabriel Resources, are promising a giant four-pit ‘project’. Resistance has been formidable with Romanians rallying to protect their beautiful Transylvanian countryside and traditional village life. Recent memories of a huge cyanide spill (in 2000) from the Baia Mare Australian/Romanian venture that poisoned Romanian rivers make the country particularly suspicious of goldmining. This environmental disaster, which many claim to be the worst in Europe since Chernobyl, is something Gabriel Resources promises could never happen at Rosia Montana.6

Felonious temptations

The sky-high price also ensures that gold and crime are now joined at the hip. Whether it is bribery (Turkey and Colombia), price-fixing (Barclay’s Bank in London), fraud (Canada’s Bre-X in Indonesia), tax evasion (Australia and the Philippines), counterfeiting (sophisticated fake or adulterated ‘gold’ sold in the Hong Kong trade) or smuggling (India), so-called ‘white collar’ crime has found a veritable playground in the gold market.

And it is not just nonviolent crime. Forcing a goldmine down the throats of a reluctant local community can be a violent business. So can seeing off local miners who either have a prior claim or feel they have as much right to gold as some large foreign mining giant.

John Kershaw/Alamy
The wounded, yawning mouth of Newmont Corporation’s massive open-cast gold and silver mine in Waihi, North Island, New Zealand/ Aotearoa. John Kershaw/Alamy

All this can get quite ugly. Sometimes it is local police who do the dirty work for the mining industry. Recently official police have been used to assault anti-goldmine protesters at Skouries in northern Greece and to smash through a blockade of peaceful protesters at the El Tambor mine in Guatemala. The list of such actions is depressingly long. Of course, this isn’t technically crime because it is the police who are doing it. Often, though, it is also necessary for the ‘miners’ to supplement police by hiring private security guards to enforce their interests. And these forces can be simply a collection of local thugs.

At their Porgera joint venture goldmine in Papua New Guinea, Barrick Gold (a Canadian ‘major’), was forced to seek exemption from legal recourse from 170 local women who accused Barrick security guards of gang rape. Once they had accepted a company ‘package’ these Ipili women sacrificed their right to bring legal action against the company.7

In their North Mara mine near the Tanzanian border with Kenya, Barrick has another public relations disaster brewing. Over the past three years 69 illegal miners have been killed by police (tasked to protect the mine) who, it is widely believed, run a protection racket for illegal miners. The dead, presumably, wouldn’t or couldn’t pay. Before foreign companies took over, generations of poor Tanzanians had practised small-scale mining in the area. Now they have become ‘illegal’.

In the deep mines of South Africa there is a virtual civil war between illegal ‘ghost’ miners (grey from spending too long underground) and the big mining companies who claim they lose 10 per cent of their gold (worth nearly half a billion dollars) to illegals.

We need to stop this silly gold rush. Our species footprint needs to be reduced so that we can live within our ecological means. We can simply no longer afford to ‘rush’ about the globe digging up a shiny metal that is of marginal use and damn the consequences. We can’t afford the energy it takes to do it. We can’t afford the water it requires or is polluted in the process. We can’t afford to keep dumping the poisonous chemicals involved. We can’t afford the cowboy capitalism of mining companies that so easily degenerates into crime and thuggery. We need a different standard of value than gold – one that measures in clean air and water and sustainable incomes rather than some mystical pot at the end of an increasingly bedraggled rainbow.

  1. Ed Prior, ‘How much gold is there in the world?’, BBC News Magazine, 1 April 2013.

  2. numbersleuth.org/worlds-gold

  3. David Graeber, Debt, The First 5,000 Years, 2011.

  4. Peter Bernstein, The Power of Gold: The History of an Obsession, 2000.

  5. Matthew Hart, Gold: The Race for the World’s Most Seductive Metal, 2013.

  6. Claudia Ciobano, ‘The revolution begins with Rosia Montana’, 4 September 2013 openDemocracy

  7. Mining Watch Canada, ‘Rape victims must sign away rights to get remedy from Barrick’, 30 January 2013, miningwatch.ca

Richard Swift is a former co-editor of this magazine. His most recent book (above) is SOS Alternatives to Capitalism, New Internationalist, 2014.

Front cover of New Internationalist magazine, issue 475 This feature was published in the September 2014 issue of New Internationalist. To read more, buy this issue or subscribe.

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