Harnessing the Power of Gold

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Monday, May 31, 2021

The lust over its glimmer, durability and scarcity has long enchanted a humanity that’s begged, borrowed and stolen to get its hands on this malleable metal. From ancient myths extolling its sacred nature and promises of immortality and power to new golden calves capable of conferring overnight riches, gold, in the face of our increasingly digital world, has reached a crossroads. One that has us wondering: Will it — can it — survive? Today’s Daily Dose dives into gold in all its mesmerizing forms to see whether it’s still worth the glory.

Nick Fouriezos, Senior Editor, and Isabelle Lee, Reporter

its shifting economics

How safe a bet is gold?

1. To the Moon?

The price of gold is currently headed for this year’s highest levels, although it remains below last year’s pandemic panic peak above $2,050 an ounce. On Friday, gold was trading above $1,900 per ounce, and some experts expect it to climb to $1,950 an ounce next week. What drives the price of gold? “The real-30 year treasury yield is the primary driver,” Jesse Felder, founder of The Felder Report, tells OZY. When dark clouds hover over an economy, investors often flock toward treasury bonds, seen as safe investments. But that surge in demand for these bonds leads to a crash in treasury yields, as has happened in recent months. “Should it [treasury yields] stay there, gold prices could soon break out to new, all-time highs,” he explains. That’s because low treasury yields push investors toward the next safe investment, gold, driving up its prices. The largest caveat to the surge? This Friday’s U.S. employment data. If the numbers beat expectations, the price of gold could fall due to the fear that the Fed might rein in stimulus efforts again to avoid inflation.

2. Good Old Gold

One of the reasons the price is climbing could be the growing anxiety around crypto-volatility. Crypto and gold are competing as “stores of value,” but considering what one Elon Musk tweet can do to Bitcoin’s value in an afternoon, it’s looking a lot riskier than a metal that’s maintained its preciousness since the pyramids were built. Gold’s biggest advantage is that historic stability, which is the very thing that makes it less sexy for investors looking for a quick return. Reading about the wild swings in Bitcoin is enough to make you want to go full Ron Swanson and bury your gold in the woods.

3. Crypto: The New Gold?

At OZY Fest, CNBC Mad Money host Jim Cramer noted a new strategy: trading gold for Bitcoin. After years of placing 10% of his investments in gold as a hedge against inflation, Cramer now believes in keeping 5% in gold and 5% in Bitcoin. “People believe that the United States is printing money … but Bitcoin is not printing Bitcoin,” Cramer said, after the U.S. budgeted trillions of dollars for COVID-19 pandemic relief. Bitcoin has an (artificially) limited inventory, which he said means it can be treated as a “precious” stock, which has made Bitcoin “more valuable, in the same way that gold is hard to find.”

4. Lemme Tell You About NFTs

Some are calling it “a new digital gold rush.” Creators are increasingly putting up their products as non-fungible tokens, unique digital assets that cannot be replicated or stolen because they’re recorded on Ethereum’s blockchain ledger. One digital artist, Beeple, sold his work for nearly $70 million in the first ever NFT auction by Christie’s. As with gold and crypto, an NFT’s scarcity confers its value. Morons, an original Banksy print lampooning art auctions, sold as a digital token for $380,000 in March — after it was consumed by fire in a livestreamed video.

5. Hedged Against Inflation

Traditionally, gold has been a haven for get-rich dreamers. Now? It’s more of a play-it-safe hedge against risk. However, if the world continues to move more digital than physical, the preciousness of gold may depreciate. But gold has demonstrated its worth over the centuries, with the value of the limited resource increasing sixfold over the past 20 years, according to GoldPrice.org. That’s some serious value, even if it’s been earned over time.

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modern gold diggers

Those searching for gold … and those redefining its very meaning.

1. Pandemic Panners

Some gold miners flouted Canadian pandemic restrictions to travel to the Yukon territory, hoping to make their fortune as the value of gold skyrocketed last year. Around 400 Indonesians were arrested for illegally mining gold on Borneo, with others also risking imprisonment and death to capitalize on gold’s increased value. And a new gold mine may be developed at the Stibnite Gold Project in Idaho, with Canadian company Perpetua Resources, formerly Midas Gold, pitching it as both a mining and restoration project. Environmental groups are calling the “restoration” aspect of the plan fool’s gold, and also oppose the company’s intent to use cyanide to extract gold from the site at Salmon River, where there was a gold rush in the late 1800s. And in West Africa, illegal gold mining is fueling human trafficking and proving deadly.

2. Renewable Gold?

In 1864, a hot spring containing nearly 10 times as much lithium as any previously discovered spring was found in an English mining town in Cornwall. But sans commercial uses, the lithium-rich liquid was left bubbling. Then, in the fall of 2020, a nearby site was also confirmed to have some of the world’s highest lithium grades. Now, lithium is in high demand, used in everything from smartphones to electric vehicle batteries, and harvesting it from hot springs is much more environmentally friendly than mining the element from hard rock. Other precious and rare-earth metals crucial to modern tech are also spurring an arms race in the Arctic, with Russia, China and the United States vying for an advantage.

3. Creative License

Artists are mining the timeless gold concept for new truths. In the 2008 sci-fi goth rock film Repo! The Genetic Opera, the absurdly wealthy (and undeniably dying) founder of an organ transplant company sings about how gold is the only thing with permanence: “Flesh is weak/Blood is cheap,” Rotti Largo sings, “Gold, it makes the world go ‘round.” Sanjena Sathian, a former OZY editor whose debut novel Gold Diggers released to critical acclaim in April, molds a myth about the son of Indian immigrants to the U.S. who greedily drinks stolen gold to assume the ambitions of the gold’s original owners. The idea isn’t divorced from historical reality: In his Holocaust account, Night, Elie Wiesel wrote about the demoralizing ways Nazis stole gold from Jewish prisoners and, in doing so, robbed them of hope. When his own golden crown was saved due to the execution of the camp dentist, “I felt no pity for him,” Wiesel writes. “My gold crown was safe. It would be useful to me one day, to buy something, some bread or even time to live.” Gold carries with it weighty dreams.

mining for mythology

More than most substances, gold has accumulated grandeur over the centuries.

1. Genesis

The scientific theory regarding gold’s arrival? As poetic as any creation myth. Like most precious metals, gold was created after the Big Bang in the hearts of stars in a process called nuclear fusion. Gold wasn’t formed until the first stars began dying, forming supernovas that then exploded gold atoms and other debris across the universe. A more modern take suggests gold can also be formed through the collision of two “neutron” stars — stars the size of eight suns that have collapsed and been condensed into the size of the average American city, a process similar to “cramming Mount Everest into a cup of coffee,” as science…

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