Gold - the hidden truth behind the gilt

Which is worth more? A house in London or a bar of gold? Answer – they are worth the same. A gold bar will buy you a house. Lots of business people and money men want us to all “move” into gold, buy it, invest in it, and speculate in it. Drive up its price. Why? Simple, they want to make lots of money out of gold. When Hotels in the Middle East start putting ATMs that dispense gold from them in their lobbies, it's time to get serious. The higher its price goes up, the more profit they make when they sell it afterwards. If ever. Because gold is a good investment. In times of war, gold always escalates in value.

They say “Gold doesn’t owe any money”. Somewhere between 15% to 20% of the world’s supply comes from modern supplies. The gold is sent to a gold processor and melted down and purified and turned into gold bars, and gold bullion. Gold Trading Houses pay a big contribution towards setting the price of the gold, although people pay whatever the market thinks it is worth. Africa is one of the world’s biggest sources. Gold is mined in some parts of Africa cheaply. Some people are digging for gold with their bare hands. Does that shock you? Gold also has not made them rich? Does that also shock you? One gram of gold only gets them a tiny fraction of what an actual gram of gold is truly worth. A typical African will make $60 a month if he or she is lucky. 15 grams is average in similar period. The middleman who gives out licences to mine gets the lion’s share of money.

Congo is where the action is. But there is a problem with gold. Just like diamonds, Gold is sometimes classified as conflict gold, and has a stigma of war and genocide and brutal dictatorships attached to it, so many people either don’t trade in it or else want it at a different price. So $1.24 Billion of gold is smuggled out of Africa every year. It is a massive business, raking in huge profits. Militia men control the gold trade. So where there is militia, there is war. So war is usually linked to African gold. An African General earns about $95 a month as salary, yet typically the same general will live in a plush mansion and drive an expensive western car. Thanks to gold. While the youngest African person that mines gold is a typical child of 7 years of age.

Who buys the gold? Mostly the UK, the EU and the USA. It can come from any gold producing country. But mostly Congolese gold. No one wants to use normal Trading Houses that trade in gold due to stiff Government Taxes imposed, so gold is pushed underground, and the true nature of its sale and route to other countries is conveniently shrouded in secrecy. Gold is an invisible fountain of wealth. Gold mining stocks soar. People are always making far more from it than they are willing to admit. Including places like Uganda. Uganda cites Gold as its third largest export. Except one thing. Uganda doesn’t have any gold in it. None. No a spec. All the gold is transported through neighbouring Congo, via Kampala. Dirty gold. Illicit gold. Gold by any means. So what did the rest of the world do about it?

It did some things. Things that accomplish little or nothing. The UN tried putting sanctions against those who are illicit exporters, but this just forced the sale of gold underground. It also ends up in places like The United Arab Emirates and other parts of the Middle East. The UN sanctions might almost be helping the illicit trade, rather than slowing it down. Gold Stocks have driven up other related markets - the financial markets, the insurance markets. (People have to insure the gold coins they buy!) You will hear many say that gold is good for everyone. There’s a huge market for gold now. The Gold price has risen phenomenally in recent months. Gold has more than doubled in price! And some countries prefer not to know where their gold has come from, just as long as there is always gold. And they don't seem to highlight how a lot of gold gets from out of the earth to being on the gold market. Which is a pity.

No one is suggesting we all stop mining for gold. Any more than I am suggesting that Gold might be responsible for subsidizing Wars in some parts of the world. No one wants a world where the gold is the reason for conflict in the first place. But we need to be careful about how the world comes to get its gold. It needs to be proper, legal, regulated. If it is worth that much, and if it will stop people being badly exploited, and stuck in poverty and if it prevents dictatorships flourishing, it might be worth it. Surely that would give gold its true inherent value. That way, people can have their "clean" gold. Beautiful gorgeous expensive gold.