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Gold has captivated humanity for roughly 6,000 years. Whether it be Egyptian pharaohs, British royalty or those excitable folks on the goldismoney.com message forum, the collective fascination with the yellow metal is clearly here to stay. It’s a topic Canadian author Matthew Hart digs into in his new book Gold: The Race for the World’s Most Seductive Metal, which will be released Tuesday. He sat down with the Financial Post’s Peter Koven to discuss the colourful and turbulent business of gold mining.
Financial Post: When you look at the gold mining industry from thousands of years ago to modern times, what themes keeps repeating themselves?
Matthew Hart: Gold rushes, first of all. They have always been one of the great drivers of the gold world. Periodically, the world either makes a great discovery or develops an overwhelming desire for gold. The first great gold rush was the discovery of the New World. If you go back to the year 1400, Europe is running out of the gold, so they go looking for it. When the Spanish discovered the New World in their search, their cover story is that they were seeking souls for God. Christopher Columbus mentions God in his journals 26 times. Well, gold is mentioned 116 times. So what were they really looking for?
Another theme is gold is always there when things go to hell in a handcart. When the world is destabilized and in a state of flux, you find gold movements in and out of countries. Gold is the emotive metal. It’s the sentiment indicator. It parallels some of the most dramatic stages of human development.
FP: What have been the key changes in the gold market over the years?
MH: For one thing, gold’s no longer money. That’s a big change. And as far as trading goes, it’s now a US$20-trillion a year market. Every day in London, they trade US$33 billion worth of metal. They can only do that because of one thing: the arrival of new mechanisms that allow for the swift, instantaneous trading of bullion. What really broke it open was a single product called the “Spider” (the SPDR gold ETF). That was invented in 2004. Within four days, it took in US$1-billion. So there was pent-up demand, not just for bullion but for bullion that was easy to buy. Suddenly, you could invest in bullion in any multiple you wanted. And you could dump it as quick as you wanted. That created the modern gold scene, where as much gold changes hands on the London bullion market in a single quarter as has been mined in history.
FP: That fact drives the gold bugs crazy.
MH: It does drive the gold bugs crazy. But “gold bug” is a big term. There’s the doctrinaire gold bug for whom gold is the only real money. They want to use gold as a monetary whip to castigate and control and corral governments. But you’ll also hear a lot of people say that they’re a bit of a gold bug. They’re the ones who just like gold.
For the rest of this article, click here: http://business.financialpost.com/2013/11/30/gold-parallels-most-dramatic-stages-of-human-development-says-author-matthew-hart/