Saturday 1st October 2016

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Fools for gold

Matthew Hart examines how the yellow metal makes men mental

by Greg Klein

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Obviously inspired by the “10-year bull run that set off the world gold rush,” this book might appear to be a period piece, a dated artefact of its time, even though it was published earlier this month. Gold now hangs near a three-year low, players like Peter Munk have been put out to pasture and gold bugs talk as if they’ve been cheated out of their birth right. The strongest reassurance heard from gold explorers, miners and investors is the exhausted refrain, “I think we’re near bottom.”

Matthew Hart examines how the yellow metal makes men mental

But Matthew Hart’s Gold: The Race for the World’s Most Seductive Metal puts a much broader perspective on this unique commodity and its ability to drive individuals as well as social forces. Exactly why people allow gold to accomplish that isn’t answered. But Hart gives plenty of examples showing how gold performs its peculiar magic.

It often comes down to emotions. “Fear drove the price,” Hart writes. “Banks tottered and currencies shrank, and in the three years after the collapse of Lehman Brothers the gold price gained $1,000. Spurred by the rising price, explorers ransack the planet in the greatest gold rush ever.”

But hardly the first. It was “a revolutionary act in Lydia in Asia Minor in 635 BC—the invention of gold money” that transformed this ancient luxury into a necessity. By the 14th century, however, countries “were famished for gold.” That changed two centuries later with the almost indescribably bloody sack of the Inca empire.

There, the splendour of gold and silver was ubiquitous. Hart speculates on the emperor Atahualpa’s thoughts as he and his army approach a small band of intruders.

The Spaniards, he perceived, had an appetite for gold. He could not have fully understood it, because the Incas had no money. They valued gold for the way it could be worked. It had its place in the adornment of nobles and in sacred rites, but even in those functions gold was not the top material. Jade and some kinds of feathers outranked it. Yet gold was what the white soldiers wanted. The Inca decided he would offer them all they could possibly want, believing that would make them go away.

The Inca rode on a silver litter carried by 80 nobles in blue robes. His throne was solid gold. Platoons of men wearing gold and silver ornaments marched after him. Atahualpa wore a crown and an emerald collar, his hair intertwined with gold. His litter was thick with parrot feathers and flashed with gold and silver decoration.—Matthew Hart

They didn’t. Using cannon and swords, the Spanish cut through the natives, slaughtering anywhere from 3,000 to 6,000 that day. After seizing control of the entire empire they “had nine forges melting about 600 pounds of gold a day into ingots. They stamped the newly smelted gold with the Spanish royal mark and added it to the growing hoard. If gold had retained any of its sacred status, the Spaniards extinguished it at Cajamarca. The artistic output of a thousand years vanished into the furnaces. It must be one of the most potent images in history—the transformation of a culture into cash.”

The first great gold rush of the modern age came in 1848. Within four years other discoveries were helping produce “40 times the volume at the end of Spain’s century of plunder and 200 times the volume from before it.”

Gold might attract larcenous conquerors and ambitious adventurers, but it draws the desperate too. In present-day South Africa, gold theft is such big business that police and government are said to be complicit. Yet the illegal miners lead dangerously wretched lives, often occupying vacant tunnels in working mines.

Because South Africa’s leading mines have elaborate security, invaders can’t move in and out easily. Once they penetrate a mine, they may stay down for months. Deprived of sunlight, their skin turns grey. The wives and prostitutes who live with them turn grey. In South Africa they call them ghost miners. They inhabit an underground metropolis that in some goldfields can extend for 40 miles, a suffocating labyrinth in which the only glitter is the dream of gold.

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