Good As Gold
The Metal That Put California and South Africa on the Map Is Still a Hot Commodity Around the World
From the Print Edition:
Danny DeVito, Winter 96
Two miles beneath the surface of the earth, in the aptly named Western Deep Levels gold mine in South Africa, there isn't a glimmer of gold to be seen. It's hot and humid, and the battery pack for the hard-hat lamp weighs heavily on the waist . Getting to the gold isn't easy. It takes a half hour of trudging through a labyrinth of tunnels, heading for the seam that's being worked.
Nearing the "stope," the working face of the mine, the tunnel becomes narrower and the roof begins to slope downward. At the actual mining zone, there's just enough room to squat and watch the miners drilling holes in the rock. Water, used to cool theintense heat generated by the drills, drenches everything, adding to the humidity. Each drilling point has been calculated precisely and marked by the mining engineers. As the drillers complete their task, others fill the holes with sticks of dynamite and connect them with wires all along the stope.
At the end of the shift, the miners, supervisors and visitors crowd into the massive elevator cages for the two-mile trip to the surface. You don't just buzz for the elevator in a gold mine; you go down and up on schedule or you don't go at all.
Back on the surface, it's time to set off the dynamite. But first, the metal shelves where the miners' hard hats are stored must be checked. Every helmet is numbered, with a corresponding number on the shelf. The blast button is pushed only when every single hard hat, and therefore every single miner, has been accounted for. The blast releases tons of gold-bearing ore, which the next shift of workers will load up for the trip to the surface. And so it goes, day after day, at Western Deep Levels and every other underground gold mine in South Africa's Witwatersrand, the fabulously rich arc of gold that runs deep beneath the surface near Johannesburg, in the world's most productive gold-mining country. Zulus call Johannesburg E-goli, the city of gold. Johannesburg exists because of gold; the residue of the mining, the gold "dumps" that still circle the city, are a visible reminder of those early mining days.
For every ounce of gold that finds its way into your wedding band or your mouth, coating the tether of an astronaut's suit or the printed circuit in your computer, as much as 30 tons of rock must be blasted loose and processed. In spite of the maddening difficulty in extracting gold from the earth, men have lusted for and fought over gold for thousands of years. It has changed the course of nations, and has been single-handedly responsible for the statehood of California and the economy of South Africa.
Why do we lust after gold? Why do we go to such extraordinary efforts to find it and to mine it? Is it really worth all that effort?
Yes, and yes again. What dreamer could envision a metal that can be pounded so flat, one ounce can cover 100 square feet or be drawn into a wire five miles long yet retain its beauty and resiliency. What fantasist could conjure up a metal impervious to virtually all acids (save for a potent cocktail called aqua regia, a combination of nitric and hydrochloric acids). But the myths are not myths. They are true, and so it has been since the beginning of recorded history. Egyptian monuments 5,000 years old depict the washing of gold ores. Alluvial deposits, gold that has washed into streams from some distant source, have been worked by hand for all these years.
The obsession with gold wasn't all pretty. Spain's search for El Dorado fueled much of its frantic and ultimately destructive exploration of the New World. Spanish explorers are estimated to have melted down more than 30 tons of pre-Colombian artifacts from the Inca and Aztec empires, destroying much of the incredible gold work in those native cultures' temples and buildings. Scarcely all that is left of the treasure are descriptions: in the Temple of the Sun in Mexico, the walls were covered "from roof to floor with plates and slabs of gold...at harvest time, the temple terraces were carpeted with artificial cornfields made entirely of gold." Even in the New World, the lost wax casting technique used elsewhere was prevalent and highlighted the sophistication of those cultures. Apart from plundering, gold mining also was carried out at a furious pace. In the century between Columbus' voyages to the New World and 1600, an estimated 250 tons of gold were mined.
The fervent search for gold speeded the opening of the American West. Reporting on the California Gold Rush, the San Francisco Californian wrote in May of 1948: "The field is left half planted, the house half built, and everything neglected but the manufacture of shovels and pickaxes." The rush was ignited when a carpenter from New Jersey picked up some gold nuggets near the junction of the American and Sacramento rivers where he was constructing a sawmill--Sutter's Mill, to be exact. By August, there were 4,000 miners on the site. Six thousand wagons, with another 40,000 hopeful "strike 'em rich" adventurers, moved west in 1849 along the California Trail. The first gold mined was found in placer stream deposits, worked easily, though laboriously, with pick, pan and shovel. In time, the gold was traced upstream to the source that led to the so-called "Mother Lode," a gold ore-bearing quartz vein that stretched for more than 100 miles along the Sierra Nevada.
It wasn't the last gold rush in the New World, either. In the United States and the most rugged regions of Canada, the shout would go up: GOLD!!! And the men would follow. Alaska was the site in 1861 and 1880, South Dakota in the 1870s, and then the stampede to the Klondike River of the Yukon Territory of Canada in 1896. And the gold rush continues. At Serra Pelada, deep in the Amazon River basin in Brazil, armies of gold miners scramble like ants into diggings that resemble the great hole left by the diamond rush of the 1880s in Kimberley, South Africa. Clothed in little more than the ever-present mud, they labor to bring up bucket after bucket of wet earth, to be processed at the surface. The site, which means "bald hill" in Portuguese, was discovered in 1980. Ten tons of gold were unearthed in the first 12 months, and that was using the most primitive, and environmentally brutal, recovery methods. It proved to be just the beginning. Gold has been found in tributaries all through the region, followed by the same hordes of miner wanna-bes that turn up at gold rushes around the world. It is called the longest gold rush in history, and it's still going on. But all these previous finds and the current one in Brazil pale in comparison to the world's greatest single source of gold, in South Africa. In February 1886, a handyman digging up a field in what is now the Republic of South Africa uncovered a rock outcropping that he recognized as gold-bearing. He had seen this rock before in Australia. But this was not the making of a new gold rush with picturesque miners scampering around with their picks and shovels. This gold was buried deep within an unforgiving pebbly material called conglomerate, so widely dispersed it could not be seen with the naked eye. This would demand heavy equipment and, especially, a way of recovering the gold trapped in the rock.
Over time, geologists showed that the reef extended in a wide arc that stretched 40 miles east of present-day Johannesburg to 90 miles west. It then picked up again, some 200 miles to the southwest as well as to the southeast. In all, the arc of gold covers more than 300 miles. But the arc, lying as much as three miles beneath the ground, is on average, only one foot thick. This gold was well worth having--but oh so hard to get.
No Tom, Dick or Geraldo could mine this gold. The names associated with South Africa's gold mines were more on the order of Cecil Rhodes and the Rothschilds, men outfitted with money instead of pans and shovels. Four of the six mining houses formed at the time still exist, including Rhodes' Gold Fields of South Africa.
The money was needed to sink shafts deep into the earth and to tunnel out the gold. Then, in 1888, a cyanide process was invented by three local chemists, a method by which the minute bits of gold dispersed in the rock could be extracted.
And so we return to our explorations of Western Deep Levels where by now the dust has settled. Four hours after the blast, noxious gases have dissipated and the second shift of miners descends to load up the ore and transport it to the surface. Processing takes place at the mine. The ore, some as large as boulders, some already smashed to pebbles by the blast, goes through a series of crushers that ultimately reduce all of it to a powder. The talcum-fine powder is mixed with water and thickened to a pulp; then a very diluted cyanide solution is added. The solution is treated, stirred, mixed, filtered and finally mixed with zinc dust to precipitate the gold and other metals present.
The ultimate result is a gold and silver alloy called doré, which is cast into rough bars. These huge bars, with a gold content that ranges from 30 to 90 percent, weigh about 62 pounds. Now they're ready to be shipped to the Rand Refinery near Johannesburg to be melted for assay. Once assayed, they are refined to separate the gold from the silver and other metals that usually occur with it. The refined gold is poured into ingots that shape the gold into bars weighing 400 troy ounces (25 pounds).
Each gleaming bar is incised with the name of the refinery, an identifying number and its exact purity. All the bars assay at least 99 percent pure--but the purity varies slightly. One may be 99.6 percent, another 99.7 percent and a third somewhere in between. This has generally been sufficient for use in jewelry. But the growing use of gold in the so-called "developing world" has resulted in an increase in demand for gold of greater purity, a level of purity once reserved for non-jewelry uses. For these buyers, the already refined bars are subject to an electrolytic process. This increases the purity to "four nines fine," gold that is 99.99 percent pure and destined to be made into 24 karat gold jewelry.
And so, finally, we have our gold. Now, what shall we do with it? All that glitters does not turn into jewelry (though that is the largest end use by far--85 percent of newly mined gold). But gold is as useful as it is decorative. Gold makes it possible for men to walk on the moon: thin coatings of gold, capable of reflecting as much as 98 percent of radiation, are painted onto space suit visors and also control the temperature inside satellites through heat-reflecting shields.
Back on earth, thin films of gold are sandwiched between office building windows, reflecting the sun's heat while adding a beautiful golden glow to the edifice, yet still allowing light to enter. Sheets of gold as fine as gossamer are used to gild the tops of buildings--older buildings whose upper levels still seek to soar skyward in the form of pyramids. Gold is beaten into leaves as thin as 1/280,000 of an inch to decorate leather-bound books. Invisible but vital, gold is used to protect etched circuit boards, in the manufacture of transistors and in telephone relay contacts. In all these uses, gold's own inertness makes it an invaluable ally of industry. This stability--gold doesn't tarnish even over centuries--makes it ideal for use even in the human body.
Given the reverence that gold inspired, the greed it generated and the lengths to which men were willing to go to find it, it was inevitable that gold would be associated with wealth, and in time would become the physical expression of that wealth. In sixteenth and seventeenth century Europe, the acquisition of wealth, especially in the form of gold, was equated with national policy. Gold was good--though no one could ever explain exactly how it benefited a nation's economy.
When the U.S. Congress enacted the Gold Standard Act in March 1900, it stipulated that the Treasury had to maintain a gold reserve of $150 million. According to the international gold standard in effect until the First World War, a country's unit of currency had the value of a fixed weight of gold and could even be exchanged for that weight of gold. Hence, U.S. dollars carried the phrase "gold certificate" and a dollar was defined as 23.22 grains of pure gold.
It all fell apart with the Great Depression of the 1930s; in March 1933, the United States went off the gold standard. The price of gold to the dollar was fixed in January 1934, at $35 an ounce, and at the same time, all gold was withdrawn from circulation. It became illegal for Americans to own gold, other than in the form of jewelry or the fillings in their teeth. People who used gold professionally, such as jewelers, had to have licenses to buy gold. The fixed price had the effect of making gold jewelry affordable to nearly everyone. Why buy fragile flowers or fattening chocolates when a gold brooch would last forever, at almost the same price? While the prices of those flowers and chocolates rose with inflation, gold remained fixed at $35 for 37 years.
Finally, with U.S. gold holdings sinking to an alarming level, in 1971 the tethers on the gold price were loosened. The price rose, tentatively at first, and then with a rush that rattled fillings throughout the jewelry industry, peaking at $850 in 1980. The gold rush then was in melting down granny's jewelry; people descended upon refiners' offices, rushing to take advantage of the hysteria. And yet the world supply was at a peak, increased by a rash of open pit mines that had been put into production quickly once the price of gold started to float.
Throughout this nervous period, as well as before and after it, an agreed-upon value for an ounce of gold was needed; the London Gold Fix was the answer. Twice a day, in the morning and afternoon, bankers representing five of the world's most prestigious banking institutions meet in the offices of N.M. Rothschild & Sons in London to establish the gold price. They negotiate a price that reflects the supply and demand requirements at that moment. Once announced, the price floats around the world as currency markets open. The market is open somewhere around the world at any given time, and so the process is ongoing. The process started in 1919, and probably gave rise to the expression "The fix is in."
Gold has always been relied upon in times of war and natural catastrophes. Whether in the form of coins, plaques or ingots, its anonymity and absolute convertibility has made it a steady companion for people in times of trouble. In modern times, gold has acquired another more nefarious function--smuggling. On Aug. 27, 1996, four women from Kazakhstan were detained at the airport in New Delhi, India. Among them, they were carrying nearly 70 pounds of undeclared gold, secreted in cloth belts they wore around their waists. The gold was valued at $461,668. These women were said to be carriers for a Russian syndicate.
India is a particularly suitable target for smuggled gold and is the world's largest consumer of gold by far. Of the 3,257 tons of gold used throughout the world in 1995, jewelry use accounted for 2,749 tons. India consumed 477 tons of that amount, at least officially, and is heading in 1996 for more than 500 tons. The actual figure for 1995 is even higher, since the Bombay Bullion Association of India acknowledges that an additional 134 tons (or more) of gold was smuggled into the country. Like many consumers in the East, Asian Indians demand pure gold, 24 karat gold, for their jewelry.
Gold also has been used as money for 4,000 years, while currency coins have been with us for at least 2,600 years. The first coins were struck during the reign of King Croesus of Lydia (560-546 b.c.), giving rise to the expression, "As rich as Croesus." By the fifteenth century, coins had acquired serrated or milled edges, to discourage "clipping," the removal of tiny bits of metal. The artistry of one of the world's most renowned goldsmiths, Benvenuto Cellini, was employed in striking coins for the princes of Italy in the early sixteenth century.
In our time, coin collecting, coupled with the desire to own and hold gold, gave rise to a series of popular gold coins, minted by gold-producing countries.
The granddaddy of them all is the South African Krugerrand, named for Paul Kruger, the first Afrikaner leader, and the country's currency, the rand. This coin, first minted in 1967, to date has consumed 1,250 tons of gold (not all coins are one ounce; the Krugerrand, like other countries' coins, is made in several weights, ranging downward from one ounce to 1/10th of an ounce). It was introduced in the United States in 1978, three years after it became legal for Americans to own gold again. But during the period of U.S. sanctions against South Africa, it was illegal to bring in new Krugerrands, although it was still legal to own and trade those already in the country. The odium attached to the coin, however, made it unpopular. But other coins were waiting to take its place, including the beautiful American Eagle, first minted in 1986 and the most popular bullion coin in the United States.
Competition also came from the Canadian Maple Leaf, the Austrian Philharmonic, the Australian Kangaroo-Nugget, the British Britannia and the Chinese Panda. These coins divide sharply into two types. The Krugerrand and the American Eagle contain one ounce of gold in an alloy of 22 karat gold, while the Maple Leaf, the Kangaroo and the Philharmonic are four nines fine; that is, they are pure gold. These ratios remain true in the smaller sizes as well: most coins are minted in half-ounce, quarter-ounce, 1/10-ounce and even smaller sizes. In the Far East, 1/20th-ounce coins are popular. At the other end of the scale, the Australian Kangaroo-Nugget comes in a kilogram size (just over two pounds), more in the nature of a doorstop than a coin.
In spite of the patriotic echoes these coins have in their countries of origin, the most popular coin in the world, according to coin expert Alvaro Meneses-Diaz of New York City's MTB Bank, is the Cat coin from the Isle of Man (a tiny Irish Sea island governed by Great Britain). The inspiration came from the island's Manx cats; subsequent issues depict cats from around the world. The Cat, first minted in 1988, is a four nines fine coin, but is intended for use in jewelry, unlike bullion coins where mint condition is crucial. Of the bullion coins, the Austrian Philharmonic racked up the most sales last year.
Of all the uses to which gold is put, jewelry outweighs the lot. From the time of the pharaohs to the era of the CEOs, from the Incas to the Indians, the Scythians to the Syrians, gold jewelry has been a sign of wealth, beauty, status, religion and excellence.
Expressing one's cultural beliefs and ideas in gold is as old as a seventh century b.c. hair comb showing two gilded fighters, one on a horse, both with swords. The nomadic Scythians, migrating out of Asia, found master goldsmiths, probably Greeks living around the Black Sea, to make their golden treasures.
In the ancient world, the greatest skills were exhibited by the goldsmiths who labored to fill King Tutankhamun's tomb with gold objects to ease his way into the hereafter. Unearthed nearly three millennia later, the gold objects dazzled and dazed the team that found the tomb in 1922, led by Howard Carter.
From that day to our own, goldsmiths have employed virtually the same techniques to make their magic. Thanks to gold's unparalleled virtues of malleability, the infinite ways it lends itself to shaping, molding, stamping, casting, etching, hammering, drawing, heating and chasing, designers have always been drawn to gold. Ninety percent of the jewelry worn in the United States is made by the same lost wax casting technique used thousands of years ago. Only electricity separates the modern maker from his ancient counterpart. Even the pharaoh's goldsmith would feel at home sitting on a jeweler's bench in New York City's jewelry district, centered around 47th Street. It is in that neighborhood that we see the techniques being played out, every day.
In the workshop there of Henry Dunay, the tools and methods used are dictated by the desired look. If hundreds of similar pieces are needed for one necklace, they can be cast for efficiency and uniformity. But finishing the piece with exactly the right texture--the look, for example, of a strand of hair reproduced in gold--requires the deftest of hands, the keenest of eyes, the right tools and patience. For top goldsmiths, everything is in the details.
You must be logged in to post a comment.