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Gold Investors: This Is How Your Golden Sausage Is Made

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Fascinating National Geographic story, "The Real Gold," (Heh, I tend to get a bit nervous whenever any of my investments are discussed in National Geographic magazine, but that's just me. I'm sure it will work out fine for you, gold bugs!) looks at the human toll of the gold mining industry.

Relax, here's a nugget for you, gold investors: In all of human history, only 161,000 tons of gold have ever been mined. That's enough to barely fill two Olympic-size swimming pools, National Geographic points out. Rare stuff indeed. Of course, with rarity comes increasingly risky ways to unearth the stuff.
"In the Democratic Republic of the Congo in the past decade, local armed groups fighting for control of gold mines and trading routes have routinely terrorized and tortured miners and used profits from gold to buy weapons and fund their activities. In the Indonesian province of East Kalimantan, the military, along with security forces of an Anglo-Australian gold company, forcibly evicted small-scale miners and burned their villages to make way for a large-scale mine."
Once mined, gold must be separated from rock. To do this you'll likely need mercury. The United Nations Industrial Development Organization (UNIDO) estimates that one-third of all mercury released by humans into the environment comes from artisanal gold mining. That would be "artisinal" in the sense that these miners, who account for roughly a quarter of all gold mined, employ ancient methods of finding the metal that haven't changed in centuries.

The remaining three-quarters of the world's gold supply is mined by the big guys, the Newmont Mining's (NEM), Goldcorp's (GG) and Barrick Gold's (ABX) of the world. Newmont now runs open-pit mining operations on five continents. Nothing artisinal about this. They use supersize machines to pound rock and open up giant gashes in the Earth, gashes so massive they can be seen from space. The grand irony is these massive machines are mining particles so microscopic more than 200 could fit on the head of a pin, according to National Geographic.
"Gold mining, however, generates more waste per ounce than any other metal... Even at showcase mines, such as Newmont Mining Corporation's Batu Hijau operation in eastern Indonesia, where $600 million has been spent to mitigate the environmental impact, there is no avoiding the brutal calculus of gold mining. Extracting a single ounce of gold there—the amount in a typical wedding ring—requires the removal of more than 250 tons of rock and ore."
Of course, while it's easy to point out the human cost and environmental toll circulating around the ridiculous pursuit of a ridiculous, barbaric metal, that is not to say the fault of this pursuit resides with investors and speculators. After all, India accounts for a full 20 percent of the world's gold demand, this from a country with a population of about a billion people and with a per capita income of around $2,700 USD.
"India produces very little gold of its own, but its citizens have hoarded up to 18,000 tons of the yellow metal—more than 40 times the amount held in the country's central bank.

I understand the investor's fascination with gold. We live in a world where signifiers have replaced signified, where currency has become detached from its reference and now operates as pure simulacra; a referent without any reference. But the philosophical problem -- a serious one, and make no mistake, a problem for investors as much as anyone -- is that we long ago exited the system of use value and exhange value (for the perfect representation and example of this, see all derivatives!) and are now deep into a new model where simulation and pure sign value rules.

The investor's mistake is discerning any value for gold outside of this system, for value no longer exists. The threat of physical gold is now, and forevermore, always the implicit threat of violence, but it is a simulated violence. Gold is estimated, literally, within this simulation to be the force that breaks the system of representative currency in a violent rupture. We speak of currencies collapsing, of "breaking" the system (George Soros was said to have broken the pound sterling), but rather than operating outside the system as it is presumed, the simulated threat of a violent attack on the system by gold's mere physicality is itself a critical component of the system's operation; in other words, gold has been co-opted by the model, and is now an intrinsic part of the simulated threat of violence the model needs in order to perpetuate itself.

Nowhere is the complicity of gold within the system more evident than in the perpetuation of paper gold as an alternative for the masses. Yes, you are told, you can own gold, physical gold, "real" gold, gold which is secured in bunkered warehouses and dutifully inventoried every hour by accountants flanked by armed guards. But this is merely one option among many on par with the reproduction of the simulated Egyptian King's gold, reproduced and re-simulated (After 30 years!) for an audience in a massive Times Square spectacle. The King Tut Times Square exhibit has generated more than $100 million in revenues.

The crisis of the real is, again, the crisis of spectacle without meaning. Paper gold, the ETF one buys for an IRA, for example, or better, the futures contract that haunts the system, for it gives the specter of the absent physicality of one brick of gold a weight by its very absence, is always about the promise of re-gaining the reproductive phase of the system which has been lost in the dissolution of meaning. But it's a false promise. A television actor, noted for the spectacle of gold he created, now reproduces a spectacle of the spectacle itself to conjure up and withdraw from us our physical gold, a necklace, a watch, a ring, in exchange for currency within this system to go forth and, presumably, multiply still more signs until all differentiation becomes lost. Differentiation was once part of the province of the sign, and the dialectic between sign and signifier, now collapsed into an endless loop of simulation, leaves us haunted by disappeared referentials, traces of meaning only visible in the periphery.

That is our crisis. Non-linearity, absence of meaning, of cause and effect. Gold is not the answer to this crisis, it is simply one of its "false problems," another fatal strategy doomed to the service of the model it is presumed to be revolting against.
POSITION:  No positions in stocks mentioned.