Gold is assumed to have eternal, inherent value, but what makes it valuable? And what determines its value now that it's no longer the basis of our currency? In the book Gold: The Race for the World's Most Seductive Metal, journalist Matthew Hart examines the new gold rush driven by investors. He travels to gold mines — including the Mponeng mine in South Africa, where he descended into the deepest man-made hole on Earth — and investigates why gold and crime sometimes go hand in hand.
"There's always some sort of cultism attached to gold," Hart tells Fresh Air's Terry Gross. "It has a grip on people's imagination that other substances don't. It seems to be ordained to be this valuable commodity."
On South Africa's Mponeng mine
It produces about a billion dollars worth of gold a year, so it's a big and prosperous mine. It's not one of the biggest mines in the world — the biggest mines are in the Carlin Trend in Nevada ... but it's an important mine.
One of the things that says a lot about the price of gold today is that this huge structure, this whole underground city, exists to mine a seam of ore 30 inches wide. I mean, that's the width of the seam, and to get that they have this huge structure there.
On Mponeng's record-breaking depth
It's about 2.5 miles deep, and it is, in fact, a hellish place to work. But I'll give you a couple of facts. ...
If you were standing at the bottom of that mine and looking towards the top, you would have towering above you a swath of ground and tunnels and chutes ... about the size of Manhattan, taken from Midtown to the top of Central Park. ... And every morning, 4,000 men piled into it and go down into, many of them, to the very deepest levels to work.
On the heat inside Mponeng
When you descend into the earth, the temperature rises according to an effect called the geothermal gradient, and at the deepest levels of the mine it's 140 degrees Fahrenheit on the rock face. That's the temperature of the rock, so you can imagine what it's like to crawl into a cavity there — it's like crawling into a pizza oven. ...
In order to make it bearable, they have this ice-making plant on the surface that makes 6,000 tons of ice a day. They mix it with salt and it becomes this kind of slushy slurry, and they pump it down into these pipes into a deep reservoir that sits there. Giant fans blow air over it, and the cold air descends down these registers into the deepest mining levels and reduces the temperature to a bearable, probably, 85 degrees.
On the illegal, or "ghost," miners who steal from the Mponeng mine
They spend such a long time underground ... that their skin turns gray. They get this ghostly pallor and the reason they stay down for a long time is that it's very difficult to get in and out. Even though they [have] infiltrated [past] the mine's security, it's still not a cake walk.
The reason that they get past the mine security is that these people are employed by criminal syndicates — very, very powerful criminal syndicates that control an absolute circus of gold mine theft in South Africa. ... They steal ore from there; they refine it inside the tunnel, usually using very, very toxic methods, like mercury, which no doubt poison them. ... Security isn't very keen to go looking for these people because, in a mine, you can hear someone coming a long way off, and these people are armed and they wouldn't hesitate to shoot security and get into gunfights. ...
There's this huge amount of theft going on. At least 10 percent, and probably more like 20 percent, of the available ore at gold mines in South Africa is stolen. That is about $2 billion worth a year, certainly with a lot of collaboration, including the police.
On how legitimate miners benefit from the presence of illegal miners
The illegal miners who are also sapping away at the mine, they are a source of revenue for the legitimate workforce of the mine, because it's those miners who are allowed to be there ... who supply them. A loaf of bread that costs less than $1 on the surface costs $12 underground. Making a couple of extra sandwiches and putting them in your lunch bucket, you can make some serious extra money.
On the end of the gold standard in 1971
As prosperity increased around the world, America[ns] started to buy more foreign products — think of German cars and Japanese electronics. So you have United States dollars leaving the United States and going into foreign banks because we're paying them for their goods.
However, the reverse wasn't happening. Foreigners weren't finding American products that they wanted to buy, and that meant surplus dollars were building up in foreign banks, and finally they cashed them in for gold. They'd say, "I don't need these billions of U.S. dollars. I'm going to take half of them back to Washington and get the gold and take the gold back." ...
By the time Richard Nixon came to power, the United States gold reserve — which had been 20,000 tons — was down to about 8,000 tons. It was a headline story. The United States was hemorrhaging gold. ... They had to do something, and they did. Nixon killed the gold standard, and that was the end of it. From that moment on, when you had a dollar bill, that's what you had — one U.S. dollar.
TERRY GROSS, HOST:
This is FRESH AIR. I'm Terry Gross. Gold - it's assumed to have eternal, inherent value, but what makes it valuable, and what determines its value now that it's no longer the basis of our currency? In the new book "Gold: The Race For the World's Most Seductive Metal," my guest, journalist Matthew Hart, examines the new gold rush driven by investors. He travels to gold mines, including one in South Africa, where he descended into the deepest manmade hole on Earth.
He describes how China became the world's top producer of gold, and he investigates why gold and crime sometimes go hand in hand. Hart is also the author of "Diamond: A Journey Into the Heart of an Obsession." Matthew Hart, welcome to FRESH AIR. Your book describes this mine in Johannesburg that just sounds like hell. You say it's the deepest manmade hole on Earth. How deep is this mine?
MATTHEW HART: Well, it's about two and a half miles deep, and it is in fact a hellish place to work. But I'll give you a couple of facts about it, first of all. The depth, two and a half miles, it's hard for people to visualize. If you were standing at the bottom of that mine and looking towards the top, you would have, towering above you, a swath of ground and tunnels and chutes and ore haulages about the size of Manhattan, taken from Midtown to the top of Central Park.
So you'd be looking at this enormous swath of underground city, and that's what it is, an underground city, and every morning 4,000 men pile into it and go down to the - many of them - to the very deepest levels to work.
GROSS: What is the importance of this gold mine in the world's supply of gold?
HART: Well, it produces about a billion dollars worth of gold a year. So it's a big and prosperous mine. It's not the - it's not one of the biggest mines in the world, but it's an important mine. And one of the things that says a lot about the price of gold today is that this huge structure, this whole underground city, exists to mine a seam of ore 30 inches wide. I mean that's the width of the seam.
And to get that, they have - this huge structure is there to attack that kind of resource. And when I arrive there early in the morning, and they sit you down in a room and start to give you some of the data of the mine - for example, when you descend into the earth, the temperature rises according to an effect called the geothermal gradient.
And at the deepest levels of the mine, it's 140 degrees Fahrenheit on the rock face. That's the temperature of the rock. So you can imagine what it's like to crawl into a cavity there. It's like crawling into a pizza oven - so very, very hot. In order to make it bearable, they have this ice-making plant on the surface that makes 6,000 tons of ice a day.
They mix it with salt, and it becomes this kind of slushy slurry, and they pump it down into these pipes, into a deep reservoir that sits there. They pass - like these giant fans blow air over it, and the cold air descends down these registers into the deepest mining levels and reduces the temperature to a bearable probably about 85 - it was closer to 90 when I was there. But - and even getting down there is - well, I guess for miners it's what they do every day.
But it certainly had my full attention.
GROSS: Yeah, describe what you saw and what it felt like.
HART: Well, you go down an elevator, in mines they call them cages. In South Africa they call it a manwinder. So as distinct from the elevator that moves rock, which is called the rockwinder, this is the manwinder. And it's a three-deck cage. So you get in on the first deck with 40 men. Then it drops down about 10 feet. Another deck fills with another 40. It drops down again, another 40.
When it's full, they let it go. You go - start to go down this chute fairly slowly at first, and then they just basically take the brake off. And this three-deck stack of men just goes plummeting down this chute at 46 feet a second. So it's a relatively smooth ride, but it rattles a little bit, and you make this descent in about six minutes, the first mile and a half.
You get out, walk along a tunnel, get into another cage, down you go another mile, and by the time you're at the bottom, you step out into a sauna.
GROSS: So among the people who are down in the mine, in addition to the miners are these kind of freelancers who aren't on the payroll. They're not working for the mine. They've snuck in past security and are just trying to, like, prospect for gold themselves. These people are very poor, and they live down there for months at a time. How come?
HART: Well, you're absolutely right, they do. In South Africa they call them ghost miners because they spend such a long time underground they're deprived of sunlight, naturally, being underground, that their skin turns gray. They get this ghostly pallor. And the reason they stay down for a long time is that it's very difficult to get in and out.
Even though they are infiltrated past the mine security, it's still not a cakewalk. The reason that they get past the mine security is because these people are employed by criminal syndicates, very, very powerful criminal syndicates that control an absolute circus of gold mine theft in South Africa. So they manage to get these people, infiltrate them into the mine, because you can imagine how big a structure it is.
It's like a city, 300 miles of tunnels. So it's not hard to find a tunnel that they're not working in, and that's where they set up. They steal ore from there. They refine it inside the tunnel, usually using very, very toxic methods like mercury, which no doubt poison them. But life is cheap in South Africa.
Now, the mines know they're there. If they don't know exactly where they are, they certainly know that they're in there. But security isn't very keen to go looking for these people because in a mine you can hear someone coming a long way off, and these people are armed, and they wouldn't hesitate to shoot security and get into gunfights, and there have been exchanges of fire in those mines and in the deep mines.
And also the ghost miners, the illegal miners who are also sapping away at the mine, they're a source of revenue for the legitimate - or workforce of the mine, because it's those miners, the miners who are allowed to be there, who go down to work, who supply them. And I'll just give you an example. A loaf of bread that costs less than a dollar on the surface costs $12 underground. So you know, by making a couple of extra sandwiches and putting them in your lunch bucket, you can make some serious extra money.
So there's this huge amount of theft going on. At least 10 percent and probably more like 20 percent of the available ore at gold mines in South Africa is stolen. That is about $2 billion worth a year, certainly with a lot of collaboration, including the police.
GROSS: Well, you've just given us this hellish description of a mine in South Africa. Are all gold mines as hellish as this one?
HART: Oh no, they're certainly not. Now, think of the gold mines on the - for example, on the Carlin Trend in north-central Nevada. They're very modern mines, mostly open pit but some underground. People who work on it would be very well-paid, you know, good miners wages. The same would be said of Australia and even in countries like China, which have, in the part of the Chinese gold mining structure that's industrial - no, people are very well-paid.
I think generally, as long as you don't mind working in a mine, certainly they're not all like that. That's a very particular kind of example.
GROSS: If you were buying, say, a wedding band today, what would you want to know about the gold in that ring?
HART: Well, it would be nice to know where it came from, but you never will ever find that out.
GROSS: Why won't you find it out, and why would it be nice for you to know?
HART: Well, I guess I'd rather have a gold ring that came from a mine where I knew the miners were earning a fair wage and - rather than some blood-soaked misbegotten gold field in a corner of Congo where the gold was wrenched out of somebody's hand at gunpoint or virtually - mined by people who are de facto slaves, brutalized.
And the reason I'll never find that out is because nobody's going to keep track of it because they probably know I wouldn't want to buy that gold, I'd rather have this other gold, and gold is just one price. No one's ever going to distinguish between this gold and that gold.
GROSS: My guest is Matthew Hart, author of the new book "Gold: The Race For the World's Most Seductive Metal." We'll talk more after a break. This is FRESH AIR.
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GROSS: If you're just joining us, my guest is Matthew Hart. He's the author of the new book "Gold: The Race for the World's Most Seductive Metal." So, all of this gold that's being mined in the United States, in China, in Africa, Australia, other parts of the world, how much of that gold is being used for jewelry and gold fillings and other things that, you know, like, require gold or traditionally use gold? And how much of it is purely for, like, investment, speculation, for central banks?
HART: Well, what has driven the current gold market is definitely investment. It used to be that jewelry was the big use. Now it's investment. In fact, we're in the midst of an absolutely unprecedented gold binge. It's really the greatest gold rush in history. You know, when you think of a great gold rush, you think of California. In the California gold rush, they produced 850 tons of gold in 10 years.
Today, we produce 850 tons of gold in four months. And most of the appetite for that is investment. It's trading. Gold is in great demand now, and what's driven that, this huge, this big, sucking vacuum that wants so much bullion, that's so greedy for it, is - well, the great mainspring of it was, in fact, the banking crisis.
Lehmans collapsed in 2008, and since then, gold rose hugely till it hit the - its top at $1,900. Now it's settled back again, but it's still historically a very, very high gold price.
GROSS: But what is the point of having gold? What good does it do you if it's not tied to the currency anymore? We're not - we haven't been on a gold standard in some time.
HART: Well, it's a hedge, I guess. You buy gold, because you hope that it will go up in value. It doesn't have any other use. It has a few minor uses. It has - for instance, nanoparticles of gold are used to improve the efficiency of solar panels. Gold makes certain kinds of medical thermometers that are very, very sensitive. And they coat the visors of astronauts with a thin, thin film of gold, because it's very reflective and protects their eyes from the sunlight.
But there are very few practical uses. Mostly, gold is just an investment. You buy it because you believe that it's going to hold the value of the money that you're putting into it, because it's essentially dead. It doesn't produce anything. You're not going to get a return from it unless it becomes more valuable.
GROSS: Well, the dollar and, you know, currency, like, around the world was tied to gold for a long time. And a lot of people think, well, that was - those were the days when currency made sense, because currency actually had a direct correlation with gold. So you knew what the value of something was, where now paper money and coins seem like they're just an abstraction, that the Fed says they're worth a certain amount, therefore they're worth a certain amount. We can print more, we can print less. But looking back, were times more stable when there was a gold currency and you knew that, you know, bills were backed up by gold?
HART: Well, of course a lot of people would like to think so, but the truth is no. They were just as unstable. What you knew was what you could get for the currency. So, under the gold standard, you had a certain amount of currency, and it had to match, according to a defined rate of exchange, the amount of gold you had in your reserves.
So, if you - if the balance of payments of a country was poor, they had to ship that gold out of the - their own reserves, and give it to the other country that was doing better in trade, thereby reducing the amount of currency they had, because you had to reduce the amount of currency you had. So you have less currency in circulation.
Why the gold standard is a topic even today is that it - critics of current monetary policy don't like the idea of the Fed being able to simply print money in order to stimulate the economy, because they think that's reckless and that it will depreciate the money. Clearly, it does depreciate it a little bit, but at any rate, that's what people don't like. And they think that the gold standard would be a sort of a whip to discipline the monetary policy of the country.
And certainly it would do that, because it absolutely disciplines it. It takes the freedom to create new money totally out of your hands. You have to get more gold to have more money. But there have been plenty of ups and downs on the gold standard, as well as off it.
GROSS: But the end of World War II, the United States had most of the world's gold, about 75 percent, I think you say in the book. And it's at the end of World War II that, you know, most countries basically go off the gold currency. Was it in part because of the U.S. having most of the gold in the world?
HART: Well, yes. That's exactly the reason. They couldn't possibly have their currencies backed by gold, because the United States had all of it, or almost all of it. I mean, there wasn't enough to support other currencies being backed by gold. But what happened was this. The - as prosperity increased around the world, Americans started to buy more foreign products. Think of German cars and Japanese electronics.
So you have United States dollars leaving the United States and going into foreign banks, because we're paying them for their goods. However, the reverse wasn't happening. Foreigners weren't finding American products that they wanted to buy. So that meant that surplus dollars were building up in foreign banks, and finally, they cashed them in for gold.
They'd say I don't need to have these billions of U.S. dollars. I'm going to take half of them back to Washington and get the gold and take the gold back. So much so that by the time Richard Nixon came to power, the United States gold reserve, which had been 20,000 tons, was down to about 8,000 tons. It was a headline story.
The United States was hemorrhaging gold. Balance of payments, that gold was going out. They had to do something, and they did: Nixon killed the gold standard, and that was the end of it. From that moment on, when you had a dollar bill, that's what you had: one U.S. dollar.
GROSS: So we started our interview with your description of a mine that you visited in Johannesburg, which is several miles deep. And it sounds - it sounds like it's a pretty scary place to be. Tell us about another mine you visited that really opened your eyes to, like, some of the extremes of gold mining.
HART: Well, I'll answer that question by talking about an area that - a kind of gold mining that I found most - that moved me most, that I found genuinely, deeply moving. It was in the Eastern Forests of Senegal, the bamboo forests. They'd been mining since the days of the Emperor Mansa Musa, who ruled the Mali Empire at its greatest height, when it was a great gold power.
And these people, they lived in villages in the forest, and they mined in the forest. Their shafts went down about 20 meters, and all underneath the forest was this network of tunnels, all interconnected. And to see these people, in amongst all of the industrial exploration and the drilling and the trucks and the roads that the people I had gone to see were building, to see this other gold mining going on as it had always gone on, it was just moving, in a way, because they seemed extremely connected.
They knew the gold price. They had cell phones. And yet they were mining in a way that they'd been mining forever, all out in the bush, mining gold and profiting by it.
GROSS: So, once we've mined all the gold on Earth, are we finished?
HART: Well, there was this very interesting story just a couple of months ago, in June. A NASA satellite picked up a massive explosion in a distant galaxy, and it was this violent collision of two dense neutron stars, so heavy, according to the story I read, that a teaspoon full of their surface weighs five billion tons.
Now, the crash of these two neutron stars released this sort of afterglow, this radioactive afterglow, and it created the equivalent - according to a back-of-the-envelope calculation, as he called it, by a NASA astrophysicist - it created 20 Earth-sized planets of solid gold.
GROSS: Whoa, really?
HART: So, there's gold out there.
HART: If we run out, we'll just have to figure out how to go get it.
GROSS: Well, I want to thank you so much for talking with us.
HART: Oh, it's been my pleasure.
GROSS: Matthew Hart is the author of "Gold: The Race for the World's Most Seductive Metal." You can read the first chapter, which includes his description of the mine near Johannesburg, on our website, freshair.npr.org. I'm Terry Gross, and this is FRESH AIR. Transcript provided by NPR, Copyright NPR.