Material World: Gold – A Strange Delusion

In recent years, the price of gold has soared, reaching, at the time of writing, a record high of $1,882.33 per oz.   This is something new.  Since the late 1970s and early 80s when gold prices suddenly peaked during an economic crisis the picture, until recently, has been one of slow decline.  Not any more!   The price of gold, adjusted for inflation is now nearly six times what it was a decade ago. Is there anything to which this sharp increase can be attributed . . .?

According to various sources total mined gold mined from known history to the end of 2009 amounted to approximately 165,000 tonnes (5.3 billion ounces).  At $1750 per oz (one of the high prices recorded in 2011) one tonne of gold would now be worth $56.26 million, and the total world tonnage, more than $9.2 trillion.   This figure happens to be less, much less, than the total money in the world – that’s the amount of real money both circulating and ‘in deposit’.  Add to this the fact that for many years there has been no system which ‘promised to pay the bearer on demand’ a sum of gold in return for paper money – no gold standard, in other words – the question has to be raised, what is the point of gold?

Figures provided by the World Gold Council show that in 2008 jewellery accounted for 52 percent of the world’s gold; central bank holdings and investments accounted for 34 percent; and industrial gold, 12 percent. The remaining 2 percent was unaccounted for. India is the major market for jewellery where it is prized for dowries, the bride’s price at her wedding. Being malleable, ductile and one of the least reactive elements, gold also has a wide range of industrial functions. It is found in everything from electric wiring to de-icing agents for cockpit windows.  It turns up in dentistry, photography, electronics and electromagnetic radiation technology.

As with most mining operations, there is plenty of evidence to show that from the earliest times and up to the present, gold extraction has been detrimental to human health and safety and has produced both short- and long-term environmental damage.  Gold mining affects workers, their communities, their land and their water.  Depending on the mine, the creation of one wedding ring, for example, can involve the excavation of 2.8 tonnes of earth and rock. The operation leaves behind it waste contaminated with acid and heavy metals which leach into the ground and the water system. The mining of one tonne of gold can produce 3 million tonnes of toxic waste.

Some estimates say that, in future, 50 percent of gold will come from lands inhabited by indigenous people, and the mining of it will result in the pollution and depletion of their water supply. This land is often leased cheaply to corporations which make huge profits from its exploitation but do nothing to clear up the environmental damage they create, and little or nothing of their investment brings long-term benefits to local people. The effects of gold mining on the ecosystem can be hugely detrimental.  It can kill off local fisheries by poisoning the water courses, for example.  It can cause the loss of habitat and biodiversity through cyanide and mercury contamination of the ground and water systems.  And it can lead to the early death of working people from industrial illnesses.

A study of the Zaamar Goldfield placer mine in a region of Mongolia which is home to traditional reindeer herders has shown that environmental problems could be ‘curtailed at minimum cost by sensible design and operational practices’.  It also showed that the environmental impact of a single ‘placer’ mine, usually in a river system, which employed dredging or draglines is ‘fairly limited’.  Nevertheless, the ‘cumulative impact of 20 active mines on local grazing economy will be negative long after mining has ceased.’  

In Bergama, near Izmir, Turkey, the Ovacik mine has had a turbulent history.   Here villagers have maintained a high level of public protest against the use of cyanide close to their homes and fresh water facilities. This project has passed through the administration of a number of different companies from several countries and has been stopped on various occasions by courts both in Turkey and Europe, only to start up once again. This September tours have been arranged for interested investors. With gold prices so high there is sure to be plenty of interest.

People from all around the world have their stories to tell about the extraction of gold and its effect on their health, their communities and their environment. Rarely are those stories positive – all the positives of gold mining seem to leave an area with the gold.  Capitalism and capital’s protectors use many strategies to achieve their single-minded goal of accumulation: colonialism; neo-colonialism; control of assets and raw materials through all kinds of questionable means; and finally protection of their assets and interests abroad either by proxy war or outright invasion. There has, indeed, been some recent speculation about why NATO is involved in Libya.  The country’s per capita gold stocks are small on a world scale, but it was believed until recently to be planning an African gold dinar for trading in oil and perhaps other commodities in place of the American dollar.  This has naturally worried certain circles in the West.

The point of gold? Accumulation by exploitation and speculation for profit, all fuelled by a manufactured desire for conspicuous consumption. Viewed from the perspective of a post-capitalist world, when speculation for profit will be a thing of the past, wars for acquisition of raw materials have ended and gold is recognised merely as a necessary component in manufacturing – from that perspective world stocks of gold will prove to be amply sufficient to meet the needs of production for decades if not centuries. And if ever the human race transcends its emotional or social need for baubles then the worldwide stock of jewellery can also be put to more beneficial use for humankind generally.  When eventually more gold does need to be mined it can be done with minimum impact on both people and the environment.

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