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Gold, jobs, and the environment
11:25a EDT Monday, July 26, 1999
Dear Friend of GATA and Gold:
This exchange of correspondence I've had in the last
few days with a GATA eGroup member, Ruth Rosenhek of
the Rainforest Information Centre, may be of interest.
Please post it wherever it seems useful.
With good wishes.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
I'm interested in the ecological aspects of gold mining
as well as its effects on communities' health and well-
being. With this foremost in mind, the GoldBusters
campaign initially sought to bring the price of gold
down by putting forth that if reserves would sell their
gold, the price would drop and gold mining would
We did not envision that something like this would
cause a quick and extreme price drop; we thought there
would be plenty of time to look at job-transition
programs and conversion to more ecological mining
But almost moments after we launched our campaign --
and quite independently, of course -- President Clinton
endorsed the International Monetary Fund's proposal to
sell its gold reserves and the price of gold dropped.
Then the Bank of England announced its gold sales and
again the price dropped.
We realize that this drastic drop in price has severe
economic consequences on communities dependent on gold
mining -- for instance, Africa.
At the same time we heard about GATA and possible
ulterior motives for these gold sales.
These two things made us uncomfortable supporting such
a drop in the price of gold. Too much is at stake and
the intentions involved are too mysterious.
We also became interested, through Brian Hill, in the
possibility of asking that all gold mining be
ecologically and socially certified, a move toward a
benign and sustainable industry.
And so we stopped putting out our hard-edged campaign
literature, modified it, and went into an information-
gathering mode, looking for realistic alternatives that
would keep both the Earth and her peoples happy.
I have been following the stimulating GATA
conversations for some time now and am impressed with
the expertise of those involved.
I'm wondering if anyone in the GATA eGroup would be
interested in talking with us about how we might
compose a call for those institutions that sell gold to
take responsibility for their impact on the gold mining
That is to say, if a reserve sells some of its gold
(assuming that this is done in an above-board way and
not for the motives that GATA is talking about), is
there some way that the reserve to be held fiscally
responsible for the job losses? That is, is it feasible
to set up a compensation fund for countries suffering
from such sales?
I do not wish to confuse this with the important
ethical issues GATA is raising. I'm talking here about
legitimate sales that are not rigged or made with bad
Do you have any thoughts about this and suggestions
about who might be able to engage in such discourse?
For the Earth,
RUTH ROSENHEK, Director
Rainforest Information Centre
* * *
Thanks so much for your thoughtful letter.
Here's what comes quickly to mind:
1) My impression is that only prosperous societies
respect the environment or pay much attention to
environmental protection. Impoverished and
developing nations are concerned only with
subsistence and will ruin their entire environment
for the sake of their next meal. (The deforestation
of Haiti is a good example; the trashing of Russia
is another.) If history is any guide, wrecking the
economies of gold-producing countries in the
developing world by driving down the price of
gold may end the environmental damage caused
by gold mining but increase the environmental
damage cause by the more impoverished society's raping
what's left of the countryside. My guess is that a
higher price of gold, rather than a lower one, along
with higher prices for commodities generally (since the
developing world has more of a commodity economy) may
be what's required to advance environmental protection.
2) Of course this is not to say that international
trade and finance don't have huge effects on the
environment, don't already tend to push
environmental damage into the developing world,
where there is less regulation, and shouldn't be
regulated to encourage the developing world to raise
environmental and labor standards. But as far as I know
even relatively advanced countries like the United
States and Mexico haven't figured out exactly how to
make the North American Free Trade Agreement work
without turning Mexico into its northern neighbor's
industrial dump. Then there's the global
warming/greenhouse gases issue that the Rio Treaty was
meant to address, but the treaty doesn't seem to be
getting very far. As for some sort of environmentally-
minded international gold mining compact, I'm no expert
here but my guess is that the developed countries'
gold reserves indeed could be leveraged to exact
better environmental standards in the developing
world -- if, of course, that's how the developed world's
central banks wanted to use their gold reserves. My
impression is to the contrary -- that the central banks
would prefer worldwide nuclear war to anything that
might threaten the solvency of Goldman Sachs and that
you'd be quite wasting your time in this direction. But
at least you'd have a good point and be trying to do
the right thing for the right reasons.
3) Could central bank gold sales be taxed to provide
compensation to the mining-dependent countries whose
economies would be damaged by those sales? I imagine
that some formula could be worked out in theory, but
remember that the world price of gold is already below
the break-even point for most mines, and that the
central bank reserves are only a fraction of the below-
ground reserves in the developing countries. Thus any
formula probably could provide only a little relief for
a very short time. You probably would be asking the
developing world to give up its patrimony for a mere
4) Where to raise these issues? I suppose the people to
start with are the people with the gold who are selling
it in bulk -- the central banks. You could ask them why
they don't try using their gold for a socially useful
purpose instead of using it to bail out the investment
houses that are short gold. The quot;debt reliefquot;
explanation for the central bank sales is easily
disproven; the relief would come not from the money
raised by the gold sales but rather from the INTEREST
earned on the money raised, a terribly small amount
that the developing world doesn't want at the cost of
devastating its mining industry. And of course there
are always the political authorities; Prime Minister
Tony Blair is supposed to represent laboring interests
but wouldn't give the time of day to the laborers'
representatives who came to visit him from South
Africa. Of course I don't think you'd get the time of
day from these supposed lefties either. But, as GATA
realized when it came into being, idle complaining to
oneself accomplishes nothing either; you just have to
do what you can do, and if you're right, you might
surprise yourself and the whole world.
I'm not sure that this is much help to you, but with
your permission I'll post our correspondence to the
GATA eGroup and forward any responses to you.
Thanks always for your interest.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.