GOLD | Money System | Financial Assets | The Story of Gold | Documentary | Currencies | Gold Price

[Music] do you think all this money no it's even if it touches money for 6 000 years somebody reversed that and eliminated that economic law well it's it's you know it's an asset the biggest misconception about gold is that it's a speculative element the biggest misconception is that gold is the cause of financial panics and was the cause of the great depression that's simply not true people always compare gold to stocks that's just nonsense the majority of people don't have any understanding about gold at all the biggest misconception about gold is that it's no longer money the idea that a bureaucrat a president could say in i-71 the goal's not money and therefore it isn't after 4 000 years the bureaucrats control money is an absurdity to anyone who studied history and understands economics [Music] gold is a financial asset which polarizes opinion like no other to many it represents the one true money but whether you believe in it or not gold has somehow outlasted every alternative currency for thousands of years i'm grant williams and in this series i'm going to explain how and why gold became money show you what it takes to find and produce an ounce of gold and examine its place in the modern day financial system we'll look at the history of the gold standard show you how gold is bought and sold around the world and you'll witness the extraordinary measures people take to keep it safe when i'm done i hope you'll have a better understanding as to exactly why this curious yellow metal has been the source of such fascination for mankind for thousands of years [Music] gold's place as money has run deep within the fabric of society since it was first discovered thousands of years ago but how and why did this curious yellow metal find itself at the center of the financial universe gold has been money for 4 000 years and one of the most fascinating things about that is that nobody knew why gold is money until about 100 years ago everyone just did it the market it was an emergent property of the market but no one decided uh let's use gold what the kings of judea had not sit down and say let's use gold it just came out of the market the history of the world is the story of gold so said canadian billionaire eric sprott unique in its endurance and rarity gold has been valuable throughout the history of mankind when molten iron formed the earth's core it pulled most of the gold on the planet down with it the gold in the earth's core could make a 13-inch coating across the entire planet's surface but of course it could never be recovered for the earlier civilizations gold was a store of value a medium of exchange as well as a thing of beauty for the egyptians gold represented the sun their gods their rulers and eternal life the incas described gold as the tears of the sun and the greek author homer in the iliad and the odyssey saw gold as wealth for humans and the glory of the immortals the first use of precious metals as money took place around 700 bc with coins struck by the merchants of lydia which were actually formed from a naturally occurring mixture of gold and silver known as electrum gold's unique properties enabled the templars to create the first banks in 13th century europe as people were able to store their gold in one bank and borrow against it elsewhere as they traveled across the continent gold's role as money and the universal acceptance of its value enabled mankind to build a vibrant economy that transcended both borders and cultures it allowed new worlds to be discovered and settled and enabled trade to spread across the globe but today we find ourselves in the first period of human history in which no country on earth has a currency backed by gold so why does gold retain its importance in the modern day financial system if it's no longer money i would argue to begin with the gold is still money it's one of many forms of money it is a medium of exchange and a store of value unlike other forms of money including fiat currencies and cryptocurrencies and in that context the gold market trades billions of dollars a day so to describe it as something other than money is a bit of a mistake there was a point in time in certain societies when the only money was gold were past that point in time gold is a competing currency it is in fact payment rather than a promise to pay most money is a promise to pay rather than being payment in and of itself gold is extremely important because throughout history gold is the only money that has survived throughout centuries and even you take two thousand years back governments have always destroyed the value of fiat money or paper money or silver money at the time of the romans to the extent that it has become worthless gold is important today because it says it's store value and in the moment at the moment we have a real dearth of reliable stores of value i mean if you can if you can think of what gold represents that financial assets don't represent for example is it scarce it's independent it's not anybody's obligation it's not anybody's liability it's not drawn on anybody it doesn't require anybody's imprimatur to say whether it's good better and different or to refuse to pay it is what it is and it's in your hand so in in a world where financialization and securitization has essentially converted a lot of things even real estate into securities which are merely obligations claims uh which are intermediated through multiple layers of financial uh institutions but there are times when they cannot perform the one thing that we have with gold is that it you know it can't be replicated you know by by turning on a well a printing press or or really adding a couple of zeros to a bank ledger you can't print more of it which makes it a better money if it's not money why does the u.s have 8 000 tons why does the imf have 3 000 tons why has russia tripled its gold reserves in the last 10 years why is china buying every piece of gold that's not nailed down and the largest mining production in the world and zero exports so the reasons why gold remains money are essentially the same as they've been for centuries and while to many people's confusion a lot of those reasons are based on faith the idea of faith in a timeless physical asset which has proven its worth since the dawn of civilization is perhaps less confounding than the faith shown in the central bank governors of the modern day monetary system who can conjure trillions of fiat currency units out of thin air at will but what was it about gold and silver which led to those two elements becoming money well to answer that question all we need is a periodic table and a big red marker pen first of all we can remove all the gases obviously we can't use things like hydrogen or argon as money next we can remove elements such as calcium and sodium which dissolve in water and also anything that reacts with air whether it corrodes or burst into flames neither of which is a suitable thing to keep in your pocket this removes 56 elements then of course we need to eliminate anything radioactive because well quite simply you don't want your money to kill you and perhaps surprisingly this disqualifies 45 elements now if you've been keeping up that leaves us with just five so-called precious metals gold silver rhodium platinum and palladium neither rhodium nor palladium were discovered until the 18th century so that rules them out as early money and the problem with platinum is its melting point of around 3000 degrees celsius which was far out of reach of mankind's earliest furnaces all that leaves us is gold and silver and it was these two precious metals which mankind adopted as both stores of value and mediums of exchange despite the fact that gold is no longer used as currency its characteristics as a store of value remain untarnished however if you want to store a valuable asset you have to do so in a way that protects it to most people storing gold is thought to be a cumbersome and expensive process but the reality is somewhat different so how do you buy gold and once you do so where is the safest place to store it gold has to be stored outside of the institutions against which it serves as insurance or against the collapse of which or the problems of which it serves as insurance and obviously it has to be stored in a way where you personally have ability to access it many people myself included prefer to hold gold in secure storage and they prefer to hold it outside the political jurisdiction in which they live because they regard it as insurance among other things against the depredation of their own government if it's physical it's allocated and segregated then you don't really care it's then down to the quality institute that are holding it and the quality of their security measures that they have while an individual can easily store up to half a million pounds of gold bullion in a simple safety deposit box there are places in the world which are home to the gold which makes up the wealth of nations and secret vaults which house the gold that the planet's wealthiest individuals chooses their means of preserving intergenerational wealth one of those vaults is buried deep beneath the swiss alps it's home to billions of dollars of privately held gold and has never before been but we were granted permission to take a look inside one of the world's most secretive locations to show you the lengths mankind will go to in order to keep this most precious of metals safe so we're here today in the biggest private gold vault in the world and here gold is stored for wealthy families for institutions for private banks and even for some central banks when you come through this vault you go through a number of security zones you're deep in the mountain here you we've gone for miles or kilometers through various security zones and different levels deep in the swiss mountain to reach actually where the gold is stored it is the only vault in the world which is nuclear bomb proof earthquake proof gas attack proof has a security level that doesn't exist anywhere in the world i've lost count of how many doors i've gone through i have no idea how far i've walked and i find myself in the middle of a mountain somewhere in switzerland and it's only when you get to a place like this that you understand the lengths that people go to to protect this yellow metal the security you have to put in place the things you have to do to keep it protected this idea of the preservation of purchasing power is central to the notion of buying gold as a store of wealth and it's been a proven strategy which has transcended history as mankind has debased hundreds of paper currencies over the centuries gold has remained as the anchor at the heart of the financial system and the reasons for that are the unique properties which made it money in the first place gold's durability portability fungibility and divisibility have combined to make sure that it's maintained its purchasing power outlasting every fiat alternative for almost six thousand years [Music] through booms and busts through war and famine and through mankind's constant ability to debauch and devalue fiat alternatives while the dollar has been the world reserve currency for 40 years that hasn't always been the case the british pound the spanish peseta and even the portuguese escudo at one point in history were all as mighty in their time as the dollar is today throughout history when civilizations needed to finance expansion they were constrained by their gold reserves the romans physically clipped their coins reducing the amount of gold and silver and thereby reducing the wages paid to their armies until such point that the soldiers refused to fight for the majority of the last 200 years the world has been on a gold standard of some sort but we live in the first period in recorded history of a purely fiat currency regime that regime began when richard nixon broke the dollars linked to gold in 1971 today the absence of any link to gold has allowed governments to increase debt to completely unsustainable levels when society can no longer service this ever-expanding debt mountain a return to a gold standard of some sort is almost inevitable we've all lived in a purely fiat monetary system since richard nixon's supposedly temporary suspension of the dollar's convertibility into gold and because of that the idea of a return to a gold standard of some sort is seen as both unthinkable and unworkable the gold standard has been blamed for the great depression and many prominent politicians and economists have claimed that a gold standard would be impossible in today's world the question is why what was the gold standard and why does the very idea of its reinstatement stir up such passion in the hallowed halls of governments and central banks we had no central bank from 1836 to 1913. that was one of the greatest periods of prosperity in world history forget american history i mean invention you know the telephone the the reaper the the airplane uh radio phonograph uh massive increase electricity massive increases in productivity uh great industrial uh successes andrew so america grew like crazy with no central bank first of all is voluntary you as a nation could choose to be on it or not um a lot of countries found it in their interest to do so and all you had to do is okay we we print money we have this paper money but it's redeemable for gold at a fixed rate and you sort of declared that that was your policy and you stayed with it now if a whole bunch of currencies are convertible to gold at a fixed rate then through a simple transit of law they're convertible into each other at a fixed rate um and that was how the world worked again with no no guidance from bureaucrats and if you ran a trade deficit you had to pay for that in gold but what happened when you had to pay for that in gold where you were decreasing your money supply that was deflationary prices went down wages might have gone down for that matter but that made you more competitive and then you would come back to a trade surplus because all of a sudden you were the chief provider likewise if you were running a trade surplus and you were getting all this gold what happened your money supply increased that was inflationary your prices went up you were less competitive so this was a self equilibrating system the gold standard was a method that tied the political classes and the voter to reality with regards to the construction of an economy untied to arithmetic we've had a number of occasions when when a gold standard basically broke down it but it was never because of the system never because of the gold it's always been because of politicians breaking the gold standard the gold standard didn't work because it didn't allow the spenders to plunder the savers the politicians were of course instrumental in that it wouldn't work today because the political class doesn't want any part of a system that constrains their power there was an article an editorial in new york times actually that they put in the 50s it pointed out that it didn't fail it was killed it was killed by the uh power the allied powers uh because they wanted to fight war before one broke out the the the consensus was the general consensus was that the war couldn't last more than a few months because there was certainly wasn't enough money for the governments to fight the war and of course that that view didn't understand the first thing the governments would do was cancel the right of redemption and print the money to fight the war there were five people kind of in the room at camp david that weekend was august 15 1971 richard nixon went up to camp david with his you know economic team uh it was it was paul volcker who was deputy secretary of the treasury at the time arthur burns who was chairman of the fed john conley was secretary of the treasury president nixon and there was a fifth man and for many years i never knew who the fifth man was i couldn't figure it out turned out to be a friend of mine kenneth damos the the dean emeritus of the university of chicago law school i spoke to volcker and i spoke to ken dam so i spoke to two of the five people who were there most involved with the decision and they all taught me the same thing which is um they really thought it was temporary so a monetary system which had endured for thousands of years was terminated by the stroke of a president's pen but what changed when nixon shut the gold window removing the dollar's anchor and how has that affected the way we think of money today the world changed tremendously after nixon closed the gold window up until that point effectively in the immediate aftermath of world war ii you had the bretton woods system where uh the dollar uh was uh valued at 35 it was tied to gold at 35 an ounce and the rest of the world's currencies were tied to the dollar and so what you had was a system where the dollar was effectively uh as good as gold they shot the gold wind and they thought well let's get ready to reopen it tomorrow um and and see you know just just in case everyone sort of there's a run on the dollar or you know people lose confidence in the in the monetary system let's get ready to reopen the window pretty much immediately so really he was sending up a balloon you know let's try this policy because we've really run out of money and the other option is is to actually run a much tighter physical system it wasn't the actual fact of closing the window that that changed anything it was the fact that everybody else accepted it right if everybody had said what you know dollar piece of paper forget it no and the dollar you know collapsed or you know people stopped accepting treasury bills then then we'd still have the gold gold center but it's the apathy of of the general population at large that caused or that allowed nixon to get away with this this this change if you think back to 1971 and decide whether on a global basis more people trusted nixon or more people trusted gold the circumstance where gold rose in dollar terms from 35 dollars to 850 tells you something about the franchise enjoyed by nixon and the franchise enjoyed by gold so what really happened to gold nothing what happened to the us dollar in the ensuing 40 years catastrophic the entire financialization of the system came about because of this soft default on on on u.s treasuries that happened in 97 of course it's a soft default because it was a temporary suspension of the of the convertibility of the dollar and i.e they still owe that gold so in common parlance when nixon uh uh abandoned the gold center that is called in august of 1971 the idea is that a gold stopped being money because the dollar was entitled to the newer people people who thought gold would collapse without the monetary demand gold to go away is absolutely crazy because of course it was a dollar's connection a goal that stabilized the dollar not the other way around so far in our journey we've seen how and why gold became money and over many centuries gold has proven itself a far superior store of value than any fiat currency but there's another story that needs telling the story of mankind's relentless quest to find gold and extract it from increasingly difficult places and then to turn it into the jewellery bars and coins with which we're all familiar milton friedman uh said and warren buffett likes to quote this that mining gold is insane you dig up the gold in one part of the world you transport it and bury it somewhere else in different hole and then any marsh in washington's be scratching his head uh of course it's a little odd to say that an activity in which man has been engaged without interruption for four to ten thousand years uh is insane it seems a little far-fetched people do do insane things for short periods of time but not usually for 10 000 years gold is among the rarest of all the elements it weighs 19 times more than water and is twice as heavy as lead but it makes up only three parts per billion of the earth's crust that's the size of the challenge to find this most precious of metals since the dawn of civilization mankind has been forced into ever more extraordinary lengths to extract gold from the earth's crust so let's take a look at the evolution of how gold has been mined over the last thousand years the earliest gold was found in riverbeds as miners diverted streams to reveal the gold beneath in fact the ancient greeks believed that gold was a combination of water and sunlight because it was found in rivers [Music] placer mining involved swirling water in circles in shallow metal pans with soil from the riverbed leaving gold as it was washed away back in 1200 bc enterprising early miners would also use water power to propel gold-bearing sand over the hind of a sheep which would trap the tiny but heavy flakes of gold when the fleece had absorbed all the water it could the golden fleece would then be hung up to dry and beaten until all the gold had fallen off hence the legend of the golden fleece a number of early civilizations used a variation of this technique called winnowing in which soil was bounced on woolen blankets allowing the wind to blow away the lighter sand and thus freeing the gold [Music] once the easily accessible gold on the surface had been collected prospectors needed to start thinking about how to work lower down beneath the earth's crust they went and this required miners to work together in larger groups as they started digging underground amazingly underground mining dates back as far as the romans but the real challenge for gold miners was to move on from primitive methods of extracting gold from the soil to developing machines of increasing sophistication which allowed them to mine gold from the hard rock below the earth's surface early days of quartz rock mining were relatively straightforward as far as the shallow deposits were concerned but until the 1860s the maximum depth miners could reach was around 300 feet the sheer size and scale of the economic and geological challenges faced by early miners meant it would take many years of technological progress to enable deeper oil to be reached hardrock miners would sink shaft in order to extract gold from the quartz rock drilling was either done by hand or through the use of compressed air drills with the help of a little dynamite hydraulic drills were the next evolution and these helped open up deeper holes in the earth's surface using drill bits which became longer and thinner the further they went down larger rocks extracted from the mines were crushed by heavy iron stamping machines to release the gold from the surrounding rock hydraulic mining used high pressure jets of water to displace the rock and soil and open up the gold beneath high in the hills water was diverted into ditches and through heavy iron pipes as the water channeled down gravity increased its pressure and as that pressure reached around 5000 pounds per square inch it was pushed through a small nozzle and used to blast the mountains apart the displaced soil cascaded down the valley and into the sluices below where it would be separated this new mining technique whilst productive was not without cost however as diverting all that water caused huge flooding in the valleys below devastating farmland as a solution to this problem in california miners turned to dredging which worked like a vacuum cleaner sucking up the material underwater and running it through a sloughs to sift out the gold mining for gold has gotten increasingly difficult over the last 50 years not just in finding the deposits themselves but due to the increased social political and environmental factors shaping the mining landscape but how has that affected the way deposits are discovered and what are the added risks now that we're looking deeper and deeper into the earth it's getting much more complex to find much more complex to recover metallurgy and now we have to deal with issues to do with social situations environmental situations so the cost of finding these things has just gone up exponentially and the difficulty is of finding a new deposit as as well back in the 80s a new technology was developed in nevada for heat sleep reach recovery which meant that you could take low grade oxidized ore and oxidized means basically the the gold used to be in pyrite iron and it rusted when it rusted that turns the pyrite to rust that liberates the gold so you could you sprinkle a cyanide solution on it that dissolves the gold and you could recover so that was a whole revolution we've gone through that those deposits are mostly gone now the next revolution in in discovery was when the iron curtain fell and the whole world basically opened up to exploration as geologists and we could go to places and walk up to outcropping ore bodies that nobody had ever looked at satellite imagery came in and by different different metals different clays produce a different spectra a light spectrum and you could see that and process it and you could find areas of alteration and you go straight to that so that was sort of the big revolution in the 90s and subsequent to that there's been no revolution it's just gotten much much harder to find these things all the discoveries are happening deeper and deeper and deeper in the earth and that brings a bunch of a lot of a lot of issues in terms of finding those things because really we're looking blind the truth is that the technology involved in finding gold has progressed the traditional methods of gold and the traditional deposit styles that we mined 200 years ago are tough to find because we already found them and mined them but the industry is doing a reasonably good job of finding new deposits the challenges now is that the easy to find deposits are often found in political jurisdictions that strike the people that have the money to go find gold as being risky political jurisdictions i find myself financing the exploration for gold in places like congo sudan kyrgyzstan myanmar bolivia places that most people normally wouldn't choose to go on vacation that's their mistake by the way you know people always say well mine is really risky because it's it's really hard to find something you know the expiration phase is really risky only one out of a thousand prospects ever becomes a mind so that's pretty risky you know it offers an awful lot of scope for shareholders to lose a ton of money and so it gets known to be a very risky business but believe me when you're in the mining business the risk begins when you find an economic deposit once once you've found a deposit what do you do well you have to do a whole bunch of technical studies to make sure you can mine it and make money at it make make money so it's actually ore not waste and that takes a lot of technical skills you have to have geologists engineers metallurgists you then have to have a whole bunch of lawyers making sure you've got your title right you've got your surface rights you've got your social license and all your all your csr people your environmental studies you've got to get all that right you've got to get your permits so you have you have you know you have expiration risk you have feasibility risk is this going to be feasible you have price risk i mean the gold price can swing or the silver price can swing you know 50 percent in a single year i've seen it happen i've seen it go with the gold price to go from 300 to 450 in a year the silver price goes from five dollars to ten dollars a year you can have the most brain you know genius level of metallurgist in your company and they can still get it wrong you can use a new method and it doesn't work on that particular ore and finally you can get in the ground you can finally start digging it up and guess what all of your economic studies are based on drill holes the drill holes might be you know a couple hundred feet apart or they might be 30 feet apart and then you have social risk you've got to have your social license right now in the world there's all sorts of places that do not want mining for whatever reason they don't want mining for indigenous reasons having to do with the social nature of the tribal peoples in areas that that have never had money they just simply don't want money there it happens in canada it happens in brazil happens all it happens in africa all over the world mines are where you find them they're in great places and they're in terrible places and you just have to take them where where they are it's a highly risky business the first thing i do when i go to a new project is you pick up the rock but what you really do is look around say okay where am i what's the infrastructure what's it going to take to get in here to build to build this thing is there a road is there power is there water is there a church sitting on top of the deposit these things cost hundreds of millions to billions of dollars and on top of that you're dealing with okay what's the political situation here you know we've seen just this year guatemala tanzania the philippines and indonesia throw taxes or pole mines or whatever on projects that were built or being built or operating so that's a respect you've got to throw into it um and then you're you're predicting as you know your company you're predicting what's the gold or copper price going to be 10 years from now when this thing's operating the risks involved in finding and building a gold mine are just the beginning the risks of investing in junior mining companies are every bit as fraught for investors as those faced by the men and women trawling the earth's crust in search of deposits mining companies need to make predictions about the costs of their mines as well as the future value of the metal they'll eventually be able to pull from the ground but investors not only have to evaluate these variables but also make a calculated prediction about the ability of the company's management to successfully navigate the treacherous path from discovery to production the chances of success are frighteningly low and new deposits are proving increasingly difficult to find when you're investing in junior exploration companies my job is to find the fatal flaw as soon as possible newmont did a study number of years back where they estimated that one in a thousand prospects turn into a mine of some sort and are one in ten thousand turn into a tier one deposit now those odds sound really bad and it's not that bad because it's easy to screen out the crap but it's still really long odds i mean looking at gold we as an industry produce about 90 million ounces a year we haven't found 90 million ounces since 2006. right now we're averaging about 20 million ounces a year so there's a real deficit because you look at their production profile and two three four five years out it drops off but you got to consider it takes for a large deposit to be drilled out studied and built 10 to 20 years so anything we find today we've got to think 10 years down the road more or less it'll be in production there's unpriced optionality there because there's going to be an m a wave at some point there has to be because the largest companies have been depleting reserves and overfist and will have to come to the market to to buy some of the sorts of names that we buy you always buy a fund or an index do not buy an individual stock because the the risk rewards autistic is completely wrong it doesn't there's no logic in doing that you must buy um you must limit your downside risk by having an index which will also maintain 75 80 of your upside potential so that's that's the first point the second is to understand what is it that moves them so while yes there's an expiration phase where you can make 10 times your money if someone drills something out and it looks way bigger than people thought that's fine but for me it's about um gold and silver mining companies are mining margin that's what they're doing the fact that a lump of yellow metal can command a price of over one thousand dollars an ounce is a source of mystery to many people but when you look at the cost of exploration as well as the cost of the labor and energy which goes into extracting it from the ground to say nothing of the taxes and the regulatory burden it becomes much simpler to understand gold's value but there is a point at which every deposit in the world becomes uneconomical to mine and when that point is reached the decisions that have to be made have far-reaching consequences so there's an expression minds die hard they really are hard to kill and they're hard to kill because when you have a mind that let's just say is losing money that's that's an economic reason to close a mine you might have a thousand people whose livelihoods depend on running that mine you have you have if it's an underground mine you have a lot of maintenance costs to keep that mind going if you close it you have to de-water it constantly you have to keep the power on you have a lot of equipment you have to maintain an open pit mine you can do less expensively but it still does have care and maintenance costs and sometimes those care maintenance costs are way higher than running the mine in a loss for a period of time so minds die hard it takes a long time to close the mind and most companies will will end up losing money for a long time before they bite the bullet and say this is hopeless miners are very optimistic people as a rule we're we're born optimists otherwise we wouldn't be in this business while it may be true that every miner is a born optimist this optimism and this willingness to go to dangerous places in search of untold riches is certainly not without its dark side i've had cerebral malaria i've had toxoplasmosis various parasites that have almost killed me i've had helicopter crashes i was in a plane crash to destroy the plane i had to climb out the window i've fallen in crevasses i've i've been in riots i almost was killed in liberia in a ride in liberia i've been tear gassed in bolivia god knows how many times i mean and of course the the real car you know what the real carnage is in the exploration industry it's it's cars it's it's it's bad roads in bad places and people get in accidents in cars and so how many how many geologists that i know and actually have worked with in my company who've died in car crash i can count them on two hens which is a lot three guys from my class have been shot in in hot places uh two of them were shot in in getting out of a helicopter in philippines in mindanao uh and one was killed in south america in a in a you know by bad guys it's a very dangerous business but i love it so much that i embrace that kind of risk and it's worked for me and i'm still alive and so you know here we are the challenges associated with finding and mining this strange yellow metal increase every year and as the process has evolved over the last half century mining company ceos are finding those challenges harder and harder to solve [Music] the mining industry has been a hard industry to operate in for the last 30 years and the aura of respect surrounding mining is somewhere below that surrounding garbage collection and the consequence of that is that many competent people would choose a job in any career other than mining the people that you see in the executive ranks of mining companies are largely of my generation which is to say old while they have experience we're beginning to lack legs in the industry the biggest challenge i think that gold mining ceos have today is that none of them that i've met and i've met dozens or hundreds of them really understand what gold is uh they mine gold as if it were copper as if it were tin as it were other things uh and and you should mine go in a very different way because gold is a very different dynamic given its stock to flow ratio and given the fact people hoard gold they don't uh consume it if you go back uh before the 70s when people understood gold uh the impetus was to have your gold mine last as long as it could uh and and again this this is something that that no mining studio that i have ever come across understands and because they're trained to to look at it as their commodity and it isn't and as a result the whole entire gold mining industry uh is is uh is massively uh misallocates its its capital let's say it's one gram per ton is equivalent basically to one part per million so what we're saying is that with in a million grains of sand one of those grains of sand is going to be gold so it's not much not much at all but that can make money that's sort of the scale we're looking at and the complexities involved in figuring that out is unbelievable because consider we're drilling a hole 300 meters down into a lower body looking from our bus it's going to be you know 100 200 meters wide et cetera your drill hole covers an area that big you cut that in half crush that half of the core down and then you extract a 30 gram sample and that 30 gram sample whatever that is is meant to represent an area 25 by 25 by 25. so you can kind of see the complexity and issues we deal with here the first time i found a gold mine a bunch of times i thought i did but didn't but the first time i actually did i was working in honduras funded by some guy out of australia and working on this conceptual idea of these hot springs that are forming gold deposits i went you know got the geologic maps which were pretty poor and in fact at that point in honduras you could only get a map from the government and they cut all sorts of bits and pieces out of it so it's really difficult and what i saw on the map was la tembla dario which is bubbling hot spring so i went there and found a big outcrop of solicited center which is hot springs deposit and that never carried anything it was much gold in that yet on the side on the fault over here in this rock type resulted all the hell it i started picking up some good numbers you know seven eight grams gold you're like a detective you're trying to figure out what happened on this piece of ground a million ten a hundred million you know billion years ago based on a little bit of data so it's always fascinating to me just figuring that sort of thing out and if you get it right it's it's it's it's incredible feeling like wow you know i got it right it's working it doesn't happen that often but as a geologist i mean that's what i love it you know no matter where i go in the world i've always got rocks to look at and think at and i like that gold is unique amongst the elements in that it isn't consumed like say silver its value makes even the tiny amounts of gold using things like electronics economical to recover and this means that importantly just about every ounce of gold ever mined remains above ground gold is not consumed all the gold ever mined in human history still exists above ground somewhere maybe buried in a pyramid perhaps but available at the right price it comes back into the market and what that means is that what gold mining does is it adds gold to the enormous gold of above ground supply of the metal already and so we think about gold mining uh it's very unlike oil production or copper modeling or iron ore mining because those commodities are consumed very shortly after their mine which gold is not now gold production has actually increased significantly over the past 150 years with the other new technologies uh and and new deposits that are found but interestingly if you look at the percentage increase the background supply has been fairly stable at between one and three percent at the moment the best best guess is probably that there are 187 000 tons of gold so this is all the gold that that ever was mined this is the stock but you could also call it the inventory and then there's the flow the flow is at the moment i think in 2016 mine production was 3 200 tons so 187 000 tons of stock 3 200 tons of flow if you divide that you arrive at 58.8 i think that's a stock to flow ratio that means that if if you continue producing at the same rate it would take 58 years to double the stock of 187 000 tons of gold but that also means that the annual inflation of gold is 1.7 which is pretty low and i think it's interesting that population growth is also roughly 1.7 now i think when it comes to to money um trust and stability is crucial if you compare it to feared money inflation since 1971 on average the monetary base grew at nine percent per year since 1913 it grew by eight percent per year so much much more if there would be a major supply disruption in the copper space or especially in the oil space i mean if if they close down the straits of hormuz or or whatever oil supply would last for a couple of months and would have a huge impact on gold on oil prices while for gold if there's a big strike in in in south africa and mining production is is down 10 it doesn't have any impact on the on the price of gold because of the stock the existing gold is there people trade with that existing gold and and at some price every holder of gold will become a seller and that's the beauty of it and that is also from my point of view the reason why gold is that liquid 20 of the world's finished gold products come from a single refinery in switzerland in the final part of our journey this episode we want you to see firsthand this fascinating process to understand how the gold extracted from the ground is turned from a few flecks and a piece of rock to a finished gold bar that what we are doing here um is actually really very very old techniques there has nothing dramatically new has been invented all the technology that we are using here is known for hundreds if not for a thousand years but of course it has been refined in the meantime okay we are now entering the what we call the black foundry black because the material that we are processing here is still containing impurities it's mainly the dory coming from the mines dory bar consists of gold and silver and some impurities actually we call dory already when it is uh one or two percent containing gold and the resting is mainly mainly silver so this is high grade dory and you see also here this these drill holes they were made by the mine by the producer so they know what they are sending out so we take these bars into our refinery as well as also scrap or jewelry or industrial scrap refine it that means we bring it up to a fineness of up to 99.8 pure gold this is a normal procedure to speed up the melting process normally we reach 250 degrees we are ready to pour in 45 million [Music] we take our samples always out of the liquid gold because now only then you are sure that you have a representative sample now we take drillings here from this sample because this is representative for the whole melt and these samples then they go to our laboratory to the laboratory of the customer and one is kept aside in case of uh disputes or disputes so this is the electrolytical refinery these are those are anodes we have just made before after that we take these ants inside each theoretical plant inside the electrolytical plant we have a acid current so we dissolve everything yeah but with a particular uh setting of current and voltage you can guarantee that the only pure gold will be so this is pure gold pure gold when it is coming back from the refinery it is the first step is we have to prepare the final bars we have two melting pots we are heating up in one pot and the other pot is pouring and then it solidifies in this cube we cut it now into pieces like this and this is a little bit less than one kilo now we are going to what we call the white foundry right because it is all pure high-grade fiber that that is processed here you see here is this carousel very low blocks now a robot is taking one of the blocks and is adding a little piece on it our man can take the block with a little bit less than a kilo some wire melts it down uh again here you know you you have the flame and it's solidified so oxygen is burned away he cools it down puts it into water and that is the final shiny part on the other side we i can show you the 100 underground bars are produced fully by robots and you remember we had these blocks for the kilo bars [Music] this is now for 100 bars so it's a little bit less than underground a robot is taking this block putting it on a scale [Music] adding some wire but then you see here in the back this furnace is is a tunnel oh sure so it is put on a conveyor belt the block with a little bit of fire and the conveyor belt is moving it through this tunnel and when it comes out it is a boating part right we're talking about thousands of pieces per day so this here is the last step [Applause] quality control that means we are checking here by hand the weight of each bar right if you want to do it precise there is no other way she takes every bar puts it on the scale and is checking the weight at the end this lady is the most important part because she is checking the bar she's the last person who has it in her hands before it goes to the customer you have two big issues uh in in in our business in refining one is precision you have to be precise and the other thing is you have to be fast because the value of gold aquila roughly forty thousand dollars does not permit us to have this this metal just laying around so um the whole production has to be meticulously planned so every step uh must be defined to the last i would say almost minute workers have to work hand in hand to make sure that the metal that comes in is as quickly through the process as as possible the process of finding extracting and refining gold gives it not only its luster but also much of its economic value today with fiat currencies all around the world completely unhinged from any kind of a monetary anchor gold's value has arguably never been higher there's some magic about gold and to some degree silver there's some magic it's the heft it's the feel it's the warmth it's the color it's just a beautiful thing and it always has been beautiful and clearly it's the absolute core of the last well not just several hundred years of history but probably thousands this genuinely changes people's lives there's more about gold than than it's just like a shiny thing what is really special so now we have a better understanding as to why gold is money and why no matter what alternatives mankind dreams up over the centuries we always return to this curious yellow metal we've taken you underground to witness firsthand the enormous challenges that confront those who scour the globe looking for new deposits and we've traced gold's path from a mere twinkle in a geologist's eye to the gold bars and coins that we know and recognize as gold gets more difficult to find and more expensive to produce the challenges facing those who spend their lives in search of this most precious of metals are constantly increasing since it was first discovered gold has held a special place in the hearts and minds of man for thousands of years it's provided stability and a means by which wealth could be measured preserved and protected for generations it remains the only universally accepted currency and the only store of wealth impervious to government debasement in the next episode we'll examine the different attitudes towards gold in the east and the west we'll explain how the gold price is different from the price of gold and we'll take a look at how gold is bought and sold around the world we'll also ask the question is the price of gold manipulated and if so by whom and we'll look at some of the many legends and conspiracy theories surrounding the oldest money on earth join me next time as our journey continues [Music] you

Channel: Plot11

Views: 315,587

Rating: 4.8869967 out of 5

Keywords: the power of gold, documentaries finance, The Story of Man's 6000 Year Obsession, gold mining documentary, money documentary, gold investment, gold mining, gold vs bitcoin, documentary, precious metals, youtube documentaries, documentaries, gold price drop, gold price, gold documentary, Gold standard, fiat money, bretton woods, fiat currency, financial crisis, gold standard explained, paper money, history of money and banking, bretton woods system, gold prices

Id: xayEKDkROwI

Length: 54min 17sec (3257 seconds)

Published: Tue Dec 22 2020

Reddit Comments

[u/britannia1980]

really good documentary

[u/MicroPenis8D]

Bottom line is, if gold wasn't valued, why do we humans go to great lengths to protect and hide this stuff.

DEEP

[u/britannia1980]

I loved when they started eliminating the elements

[u/RandomAccessManowar]

It also reveals the process of mining production of gold. A suspension in production for example due to lockdowns, may not limit gold’s availability. Only 1.7 percent of gold is added by mining each year.