Gold! The Good, Bad, Ugly and the Hideous. Part 2

The Ugly

And then they go to church and pray

For God to give them grace.

If not, O Lord, then give us GOLD,

We'll take that in it's place!"

The Wheel & Alliance, or The Impending Revolution,, 1889

This is the down-and-dirty about gold. The lure of this yellow metal and the fantasy of instant wealth can turn a decent law-abiding person into a would-be thief or murderer in an instant.

A career as a gold assayer gave me lots of opportunities to do five-minute qualitative tests on ores brought to me by fellow miners hoping they had struck it rich. EVERY SINGLE TIME the sample was either some variety of pyrite or flakes of mica. A local gold buyer told the same story, that people employed by the local mines were constantly bringing in ores to sell. Most were pyrites or mica, but rarely someone would present real gold dust or mill concentrates stolen from one of the local mines, easily discoverable from it's geochemical "fingerprint". Whether actual gold or pyrites, the intent was the same: theft.

The biggest problem with gold is human greed. How many deaths, lost partnerships, lost friendships, destroyed lives, murders and other crimes have occurred because of the lust for gold?

Gold flake and lost friendship

While working as an assayer and refiner for western gold mines in California, Arizona and Nevada, I had ample time to roam over the hills panning the streams and dry washes for a bit of gold. It’s never a good idea to go into the arid western deserts alone, so usually I took a friend or co-worker along for company.

We panned for about an hour with bottled water we brought along because the streams were all dry at that time of year. Suddenly he gave out a yell of triumph, shouting that he had found gold. I went over to see what he had found. He had found gold alright, just the smallest, semi-microscopic gold flake that could be visible to the human eye, but he was jumping and shouting like he was suddenly rich. In reality it would have taken thousands of flakes that size to be even worthwhile.

To make matters worse for him while he was dancing around with his gold flake on the tip of a finger, a sudden gust of wind came by and his gold disappeared. He was furious! He started yelling at me, “You stole my gold! YOU STOLE MY GOLD!” I tried my best to calm him down before he had a stroke or tried to kill me, but from that day forward he looked at me as a thief and his mortal enemy. A friendship lost for less than a hundredth of a cent worth of gold.

Accountant with gold bar

Part of my job in the mine was to smelt the gold doré and pour it into bars weighing forty-two pounds each. This wasn’t pure gold, only about 70%, because there was a lot of silver and copper in the alloy.

One day several big-shots from the home office came to look over the mine operations and check on their investment. The mine manager asked me to have three or four doré bars ready for them to inspect. Four well-dressed men came into my smelting area and stood around the table on which lay four or five stacked bars. I picked up one of the still-warm bars and handed it to our Mine Manager, who passed it to one of the visitors. They were visibly impressed and passed it to the others.

The last man to hold the bar was an overly-dressed accountant-looking guy who appeared to be the stick-in-the-mud “all business” type, hat, glasses and all. After holding the bar for a few seconds, he began to twitch slightly. Then he started to visibly shake. This man who had not uttered a single word since their arrival, suddenly started to shout...”Gold...GOLD….GOLD! AND IT’S ALL MINE!”

The others standing around chuckled and took it as a joke until his face became ghastly white and he was obviously in danger of dropping the bar on his own feet. One of the other men took it from his hands as he appeared about to faint. He was ushered out by two of his companions and taken to the first-aid office for something to calm him down. People have actually died from no more contact with gold than this.

“Hog leg”

A friend and I were panning a dry wash in southern Arizona, and having pretty good luck. Suddenly a pickup drove up and came to a screeching halt in a cloud of dust. A big brutish looking man jumped out and came running toward us with a large revolver in his hand, and shouting “You’re on my claim!” I asked him to identify himself, and he yelled, “This ‘hog-leg’ does my talking!” I told him we didn’t find any claim markers as are required by law, and if he can prove this is his claim we will be happy to leave. He calmed down and said he had registration papers in his trailer about a half mile down the valley. He brought the papers, they were legit, so we left.

This was one of the nicer encounters. Some will just shoot first. People get really weird about gold.

Amalgam

Where I worked we had a huge mercury problem. Evidently a lot of cinnabar was crushed and processed along with the gold ore.

Mercury doesn’t dissolve or alloy with gold, but wets it. It will try to absorb every tiny bit of gold it encounters in its travels.

One day a couple mill mechanics came to my assay lab saying they had found something strange. I looked into the bucket they carried and saw a huge glob of mercury amalgam. I told them it was just part of the mill mercury problem and asked them to collect all this they could find and bring it to me for disposal. In the end they brought me well over a hundred pounds of gold-saturated amalgam. It could be molded like a snowball in the hands and even make the same squeak as wet snow.

I purposely misled the mechanics because I knew that if they were aware of seventy or eighty pounds of pure gold in that one pipe, they would find some excuse to rip apart every conduit in the plant.

Gold does strange things to the human phyche.

The Hideous

Government and Gold

On June 5, 1933, FDR ended the US gold standard. All gold coin in circulation and all banknotes redeemable in gold were recalled by the government. The private possession or sale of gold was prohibited, and no gold could be brought into or taken out of the country by ordinary citizens. A law was passed giving the president power to arbitrarily change the price of gold at will, and it was changed from $20.67 to $35.00 per ounce. The government claimed ownership of all gold other than collector coins and certain gold jewelry.

This gave miners and prospectors incentive to produce more gold, though their only market was the US Government, and at their price. A forty percent increase in gold price caused a flood of gold from mines into the government vaults at Fort Knox. Though the possession of metallic gold was illegal at that time, the circulating currency was still tied to a precious metals standard. The resulting devaluation of the dollar was not a good thing for a country already in the midst of the Great Depression.

Digital currency (NOT Crypto)

Government control of currency has always been a favorite way for despots to keep the populace in line. The Federal Reserve System was an attempt to control the economy by controlling the supply of currency in circulation. As long as the currency was backed by gold or silver from the Treasury, the politicians were somewhat reined in from spending like drunken sailors, so the silver standard was repealed in 1964, and during the administration of Gerald Ford the country went officially to fiat currency, backed only by the public’s confidence in the government.

Today our currency is backed by nothing officially, merely the confidence that the country will remain stable. When the politicians need an extra billion or trillion or more for needless spending, they are no longer hampered by all that “US Treasury” nonsense. Just keep the presses running full tilt and watch inflation rise!

But….it COULD get worse! In the past couple years there has been a lot of talk about digital currency. Physical money would disappear, and we would just have an account with a PIN number, finger print or some such. We would be paid and make purchases with just a credit or debit entry to our digital account. True, it would eliminate most robberies because there would be no money to rob. It also would probably stop a lot of tax fraud because the government would have knowledge of every digital cent you earn or spend. However, control of individual accounts increases their power exponentially.

Electronic currency is a two-edged sword. While it would be in many ways convenient for the consumer, and it may eliminate a lot of the perennial problems we have with cash it could be a very powerful weapon in the wrong hands. Not all governments and politicians exist to serve the best interests of the people. What happens when someone with power decides he doesn't like the way you voted, or your religion, or the shape of your eyes or color of your skin? With an electronic flip of the switch he can instantly freeze your assets and put you into poverty and destitution until you are willing to toe the government line. And don't kid yourself, it CAN happen here!

I can foresee the emergence of a huge underground economy, using barter or some type of expedient currency like gold or silver coin. In such case it would behoove all citizens to possess physical gold and silver, not so much as an investment, but for privacy and insurance against tyranny.

Ominous rumblings are in the world right now. We may need something stable soon!

Gold is SOMETIMES a good LONG TERM investment...

...but that depends on how much the government and the greedy rich leave it alone.