The Story of Gold – Circular Economies and the Gold Trade
By Michael Karpati
Gold is at the heart of the human imagination; gold bars, gold rings, gold watches, or put another way, value, love and wealth. What is the story of gold? How is it made? What are the end uses? What is the environmental footprint? Is there a circular economy with the production and usage of gold, where it is reused in environmentally friendly ways? To answer these questions, one must not only consider where gold goes once found and refined, but where it comes from, and what happens to gold items which have been discarded. There is an entire cycle to consider, some of which are individually closed, or open loops, such as electronics which globally little are recycled.
To begin, we must consider where the gold we use and handle comes from. There are two primary sources for the mining of our gold: Artisanal mining (ASM) and large-scale mining (LSM). Artisanal mining is small-scale and human intensive; here, gold is mined through physical labour. Large-scale mining is machine intensive, with large quantities being mined utilising industrial equipment in open pits or underground. ASM has significantly smaller environmental impacts, given that it uses physically intensive labour. As such, it is better from an impact perspective for the environment, which, in turn, is good for all of us. There are social challenges with ASM, of course, but that does not discount the environmentally cleaner impact of ASM. Large-scale mining, using heavy machinery, impacts the environment through emissions from mining equipment, chemicals usage and waste generated, stored in tailing dams, as well as through the significant water utilization involved in mining. The difference in environmental impact can also be shown from a yield point of view, with ASM generating on average 8 to 30 grams of gold per ton of collected ore, whereas LSM has an output of maximum 3 grams for every ton that is collected. Whether ASM or LSM, once mining is completed, the ore is processed, ideally in a safe industrial process forgoing mercury use and ultimately refined in large refining operations, majority of which were in Switzerland until recently.
What is the end use for gold that we take out of the ground? There are three primary places it ends up: bars and coins, jewelry and watches, and electronics. The first is a closed circuit. Closed circuits are good for the industry; they are circular, which means the wealth flows through the system without gradually dissipating. What happens is, following the process of mining and refining, the gold is made into bars. Some of these bars are kept in central banks, while others are melted down and form the basis for gold jewelry and electronic components. Those moulded bars and coins make up 27% of the world’s gold, yet still more gold ends up as part of investment opportunities. 4% completes its journey in ETFs, amongst other similar products. Another 8% finishes in central banks. This circuit is known as the bullion trade.
The second end use, jewelry, is also a closed circuit. People rarely simply throw out jewelry. They pass it down, and, when one no longer wishes to keep it, one sells it, and it either gets kept by another, or is melted down to be brought back into the system. Thus it remains there forever, passing from one set of hands to the next. Following the production of semi-completed watches and jewelry, the remaining dust and scraps are recycled back into the system, thus maintaining the closed nature of the circuit. Following this, watches and jewelry are pushed out into the market. Instead of being immediately melted down when the owners cease to need these items, there is a strong second-hand retail market for gold jewelry and watches. After they have fully run their course, these luxury items are brought back into the system in the form of bars and alloys, just as is done with the gold in the bullion trade. This segment of the system takes up a full 52% of the overall gold trade.
The final end use, electronics (printers, cell phones, laptop computers) hold within them a relatively small portion of the world’s overall gold, at 9%.
Technology is the only open circuit under discussion here. When you consider how quickly technology evolves, you must also consider what is done with obsolete technologies. How many computers have you had through the years? How many cell phones fill drawers you never open? How many end up in a waste dump? This is how it was described to me. These electronic products all have a miniscule amount of gold and other metals within them, but gold and precious metals nonetheless. This gold is wasted. An important step is to begin recycling the gold in electronics. Begin bringing it back into the system to be reused. Reduce, reuse, and recycle. Scraps and dust do go back into the system when electronics are being made, but taking the next step is a difficult yet necessary act. Some electronics do go into the second-hand retail market, but you must also consider the amount of electronics that is simply discarded without ceremony. This retail market creates 350 Tonnes of E-Waste every year. It is important to minimize waste by closing the loop on urban mining.
To conclude, gold captures our collective imagination, and is known for possessing certain end-uses. Are all said end uses widely known? Did you know gold is in your cell phone? Did you know you were wasting gold whenever a cell phone got locked away in a corner? Whether that phone works anymore or not, is irrelevant; it holds an intrinsic value due to the elements utilised in its construction. A circular economy minimizes waste, thus minimizing environmental strain. The great news with gold is that most end uses are circular. For areas like electronics, learning about circular implications will enable society to take proper measures for disposing of old or broken tech, thus maximizing circularity.