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We just run out of gold! What next?!? - part 1

2024-03-04
We just run out of gold! What next?!? - part 1
Recesja

What if gold has run out on Earth? No more gold. Es gibt kein gold. No existe el oro. Zołota niet. Złota nie ma - wyszło. In our search for yellow metal, we’re going to travel in time, reach where mankind barely reached so far, discover fascinating world of microorganisms and try to make modern philosophical stone. We’ll step down below Earth’s crust, touch the ocean bottom and look in the stars. So join us in an adventure in search for not-so obvious and hidden gold.


Let’s make theoretical assumption: Gold on Earth is no more

Just for fun and with a little bit of exaggeration, let’s assume that we were all wrong on size of reserves, and realised that too late. All assumptions on underground resources were wrong. Unexpectedly, primary gold supply is basically over. Doesn’t matter how.

Although prospecting budgets were growing, miners were unable to discover new gold resources. And even if they did, ores were not saturated enough or with yellow metal located too deep in Earth’s crust. Hence, extraction was beyond any reasonable points of financial viability, even with elevated gold market prices. Diversified in between different metals miners predominantly moved their machine park to different locations, securing now empty open pit gold mines for future decisions. Alternative was to conduct terrain recultivation earlier than upon mine lifetime ends. Although budgeted, those costs were modelled with assumptions that some income and will be generated. And this had fallen drastically or gone for good.

However gold focused juniors didn’t have pockets deep enough. Abandoned excavators and flushes in Yukon and Alaska are now being covered with snow and ice during winter and slowly succumb into spring dampened soil. Once mighty diesel-fueled monsters, now stand lifeless and rusty as a testament of mining that once has been.


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Rusty abandoned excavator. Somewhere in Russia. Source: Victor Oduev

Toronto Stock Exchange and other gold miners’ heavy exchanges experienced losses incomparable to anything they knew from the past. When initial news on gold famine occurred, demand for gold mining shares had grown in hope they will be re-priced as some will still be able to deliver. But soon more news followed, and everyone realised that it was really the end of gold mining. Initially trading had to be ceased over and over again, as no one wanted to long gold miners with everyone bet against them. Eventually certain governments temporarily banned shorting. Many fortunes had been lost due to two simple words – margin call. After period of significant volatility and wave of bankruptcies markets finally stabilized, but on lows haven’t seen since decades. Only handful of gold miners – these diversified in different metals – managed to survive. However, their liquidity is mostly very tight and shares diluted. Sector hoped for acquisitions and mergers to be made by larger international entities, but they were too busy trying to save themselves, as gold mining divisions were usually big part of their operations. Similar brutal losses happened to producers of specialized mining equipment and specialized prospecting companies. Now unemployed sectoral employees from Canada, Australia, Russia, China, USA and other former gold producing giants rushed in strikes action. There is news about fights against police, violence erupting on streets and even some unconfirmed info about casualties.

Gold futures market is dead now – how to trade with something that can’t be mined no more, everyone holds and even if considers lending, premiums are beyond anything reasonable. Hence we observe application of main principle of Gresham’s Law in extreme. Fall of futures still send aftershocks on stock markets. Trading on LBMA and Comex had ceased, and whoever owned physical volumes, turned out to be a winner. Couple of big banks had been caught off guard shorting gold heavily. In new reality, March / April 2020 losses were nothing in comparison. Gold trading divisions in many banks had been permanently dissolved. FED had to make very heavy liquidity injections to keep ‘too big to fall’ banks afloat, and barely succeeded. As per ancient roman saying, it had to ‘divida et impera’ – divide and rule. Hence couple of big banks had been divided between other giants, other medium and small banks had been absorbed, and other had been let to fall. BoE and ECB had less luck as local markets had couple of zombie banks. All they needed to fall was a proper crisis, and now Europe’s banking system crumbles like a snowball.

Market correction is not that extreme anymore. When news broke out, gaps in between red candles and candles themselves were extreme in size. That was the moment, many had realised on real size of indirect ties to yellow metal. Markets were very tech / services focused. Gold mining, although most interesting of all metals was of little share on main indices. Large miners were incomparable in size to tech giants. But apart of that, there were other sectors - tech, jewellery, automotive, ETFs, dentistry – all adversely affected and in effect, heavily contributing to market falls. Eventually investors realised – either have to find replacements to gold or fall, so panic had been slowly contained and turned onto cold determination.

Only wind blows now in famous golden souk of Dubai, now empty and desolated. Local authorities already announced it to be turned onto posh farming market. Shanghai gold stocks had been ‘arrested’ by official authorities. Switzerland lost big share of its GDP, however its world-famous refineries did attempt to change processes towards different metals. Considering however there want to enter onto already established structures and supply chains, things seem to lean south. LBMA vaults tripled security, but real problem lies somewhere else. Claims - everyone wants their loaned or collaterized gold back. Problem is that volumes secure multiple transactions. So withdrawal before maturity would require paying penalties for breaking the agreement. Not even to mention on troubles to borrower’s stability. Hence London ceased trading. Treasury and BoE Governor negotiate current situation with market participants, including foreign central banks and City. Anything is possible, including fall of LBMA, as it’s “golden” part is largest and most liquid in its structures, than for other three precious metals altogether.

Micro scale of ‘gold on Earth is no more’ statement

Spot gold price had grown but not as some would expect. Majority of gold tech applications could be replaced with i.e. silver. Replacements – although often worst quality, were to be found elsewhere. Jewellers focus on palladium, platinum, silver and other metals. Only some bullion holders decided to sell their bullion. Majority keeps gold in expectation of much better prices, and by simple application of Gresham’s law or simply due to growing distrust to policymakers (this in comparison to our reality remained unchanged). After all, finances of the world tremble heavily and civil unrest escalates.

Commercial and central banks on the ‘West’ announced voluntary gold re-purchase programs, but ‘East’ fully banned exports and discusses if it’s better to do voluntary or obligatory re-purchases. Due to that, many commentators decided to share their point of view on social media, expecting ‘West’ to act same way. Speaking of… most hard-core metal commentators popped champagne due to a fact hated Comex is no more. Sad constatation came sometime later – as whole sector, something they dedicated life to, was no more. Most viral video commentator on subject just reached 1 bln views. His words…

‘To hell with Federal Reserve. It’s a new 1934 they making on us. They won’t have me gold!’

… became worldwide popular. Mainstream popular. To the point it had been looped in a famous trance/techno DJ setup, during one of the live gigs in Berlin’s famous club. And we won’t even mention on t-shirts…

Yes – gold is on everyone’s mouths. Just maybe not in the way, we’d like to couple years in the past.

Gold recycling from old jewellery and electronics became profitable sector. To the point, major US investment banks and largest tech made large acquisitions in such. However recycled volumes are not able to fill demand gap just by itself, plus resources are not infinite.

Evening news mentioned on gang of three, who had stolen early medieval coins from British Museum and melted them to bars. Apparently wanted to make sales on black market. Egyptian Museum in Cairo doubled security by Tutanchamon’s mask and other artefacts of the past. Due to security issues, many museums and art galleries decided to replace gold plated frames or gold arts, with tungsten made copies.

United Nations appointed special agency to coordinate containing global ‘gold’ crisis. Its efforts are futile, funding highly insufficient and fires to contain appear daily. Many underdeveloped countries, whose GDP, budget and taxation was highly based on gold mining, succumbed into chaos. In Indonesia situation could be now described as contained, but this required army on the streets and immense number of casualties.

Most of Africa is being torn by civil war. South African government is near collapse, and no one knows if it will happen due to violent street protests or because long column of military vehicles heading towards capital. Situation is much grim in Ghana, Burkina Faso, Mali, Niger, Chad, Sudan and South Sudan and other. Tribal warfare and long forgotten conflicts are now awakened by recent crisis. Majority of inhabitants dependant on gold mining had lost its source of income. Famine rages. There are stories about new radical movement born in south-west ex-gold-bearing region of Niger, which quickly grows in power. It blames ‘colonial westerners and their lapdogs’ for total collapse of structures, drought and famine. Although, accusers use other words, which we can’t quote in here.

In a dazzling light of a thousand neutron stars

Gold as element seems to be an effect of intense processes of nuclear fusion, high energy, heat and pressure altogether. Yellow metal was originally created inside stars, and this process was far from being peaceful or consistent. That is at least how astronomical perspective theorizes on that. This process, better known technically as nuclear fusion, first dealt with gold in its primary elements in the form of hot gasses. Our yellow metal as such didn’t even exist yet in this phase.


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Formation of solar system. Source: https://www.pbslearningmedia.org/resource/buac18-912-sci-ess-solarsystemformation/solar-system-formation/

Entire process of moving from lighter to heavier elements took billions and millions of years, as stars were born, burned and churned. Eventually, close to the end of their lifetime, they violently grew, becoming red giants - solar beasts of unproportionate to original size. From there, they had eventually turned into white dwarfs, then black dwarfs, or blew apart violently as supernova. At the centre of our solar system existed cloud of interstellar gas and dust. The cloud collapsed, possibly due to the shockwave of a nearby exploding supernova. When it collapsed, it formed a solar nebula – a spinning, swirling disk of material. Local gravity pulled more and more material in. Eventually, the pressure in the core was so great that hydrogen atoms began to combine and form helium, releasing a tremendous amount of energy. With that, our Sun was born, and it eventually amassed more than 99% of the available matter. This happened approx. 4.7 bln years ago and our own star will use all its fuel in the next 5 bln years.

Earth is dated at 4.5 bln years. As gravity of our home star pulled material in a swirl around it, balls of material and eventually clumps begin to form, coalesced and became the first prototypes of planets that eventually made our Solar System today. This process also created lot of other material floating around Sol System, including millions of meteorites that get pulled into this chaos. Some were ejected far from our solar system, some slammed together or with other planets including Earth as well.

We’ll come back to our neighbourhood in few moments, for now, let’s continue on macro cosmos scale. So as sun is born or dies (including supernova explosions), these violent acts propel atoms of newly created elements far and wide. In the past, such expulsion seeded known universe with first atoms of metals, including gold. Considering size of known universe, with all certainty we can say, such processes occur now and will occur in the future.


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Artist’s conception of a neutron star merger. This process also creates heavy elements. Credit: Tohoku University

But from the classic side of the theoretical astro-physics, comes also one more – we consider it complementary - idea, that gold was created by two neutron stars colliding with each other like a stellar car accident at high speed.

When one star slammed into another, presumably a much bigger one, the smaller star was stripped and collapsed. As that occurred, core of consumed star was barrelling into the bigger start with an incredible amount of additional energy, pressure and power. Just imagine force able to squeeze Mount Everest in the glass, without its breaking. Energy being released at the same time is what is referred to as gamma-ray bursting, which in essence is a huge solar-level explosion. When released, it has capability and power to create elements, like gold.

Edo Berger of the Harvard-Smithsonian Center for Astrophysics (CfA) estimates

‘(…) that the amount of gold produced and ejected during the merger of the two neutron stars may be as large as 10 moon masses’.

And now imagine that this upon ssuch event volume dispersed all around. In 3d dimension. Large part of it may travel through the void until today.

Considering that our Moon is Australia like wide, we think it is time to cool down and return to Earth.

Extinction level space bombardment

And so, we returned to the Earth, just not the one we know.

Scientists are rather certain that gold in extra-terrestrial origins. Physicists believe that yellow precious metal was deposited on our planet after a massive explosion or explosions occurred in space. And it is complementary to the earlier bombardment we experienced from our own personal star.

So we’ve been first bombarded by our own Sun upon planetary creation, and then by space debris from different solar systems. On first of these, most of heavy metals in asteroids would have sunk relatively quickly and permanently into the Earth's core. According to some simulations, during impact, core of large planetary debris would penetrate so deeply that it would merge directly with the Earth's core. And even with smaller impacts, metals would also slowly sink through Earth's mantle to its core over the course of several tens of thousands of years. This could’ve been easily achievable while Earth was in its early ages, before crust and mantle had fully formed.

We could then assume, more than 99% gold that reached Earth is now lost as it is now part of planetary core. As Geologist Bernard Wood of Macquarie University in Australia states - during time when Earth was basically molten magma ocean, gold bearing planetoids bombarded it heavily. Magma dissolved metal deposited in asteroids. These had been absorbed by planetary core. According to his estimations, there's enough gold in Earth's core to coat its surface in 45 cm thick layer of gold. ( abc.net.au/science/articles)

That would definitely make us all extremely rich extremely and extremely dead at the same time, as Terry Prachett once wrote.

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Gold on Earth, but also inside of Earth. Source: https://www.quora.com/Can-you-predict-how-much-gold-is-still-available-in-the-Earths-crust-What-about-the-mantle-or-the-core-Is-there-a-lot-of-gold

But it’s not the end, as Earth and most likely other celestial bodies had been later on bombarded in the past by space debris containing gold cargo. Just this time, coming from outside of our system, and in different stage of development of our planet.Earth is considered to be approx. 4.5 bln years in age. In terms of periodization, Earth’s lifetime is divided between four great eons – Hadean, Archean, Proterozoic and Phanerozoic - and each signifies period of great changes. First 500 mln years were named Hadean, which comes from Greek mythology. Hades was a place for departed souls. And although different in form from Christian image of hell, in time had been identified with predominantly more common image. Characteristic to this period were molten lava, volcanism, heat flow, and surprisingly – liquid water. It is at the end of Hadean and beginnings of Archean, when Late Heavy Bombardment occurred.

At 4.1 – 3.6 bln years in the past, disproportionately large number of space debris smashed into our Solar System. Some had been intercepted by Jupiter’s strong gravity field. Earth’s Moon also acted partially as a shield, as it was orbiting our planet already. Moon had been formed approx. at 4.5 bln years ago possibly as an effect of Earth’s collision with smaller planet called Theia (Theia hypothesis also explains larger than average core of our planet). Despite of that, many metal bearing asteroids managed to strike Earth.

Preventing unasked questions - in one part of the series we will talk on asteroid and space mining in general. We will also write a few paragraphs about Psyche-16. But one step at a time.

However this bombardment occurred hundreds million years later, when Earth was not anymore just a sphere of molten magma, Hence, planet experienced different effects. Joint efforts of scientists from Yale University and Southwest Research Institute proved, that if impact won’t penetrate directly to the Earth's core, as local magma ocean forms at the impact site. Beneath, lies thin semi-molten transition layer. This plays a crucial role as a temporary trap for the metals from space debris.

Explaining what happens next without geophysical terminology may be bit difficult, but we’ll try to keep it simple. Impact occurred, gold, platinum and other metals in asteroid were sunk in an ocean of magma. Melting point for platinum is at 1769 °C, palladium 1555 °C, for gold at 1064 °C and for silver 961 °C, while magma may be between 700-1300 °C. Vast majority of metals fall to a bottom of liquid magma ocean, eventually reaching transition layer, which is much denser. Transition zone is now being affected by high metal content. In effect it becomes gravitationally unstable, so metal begins to sink more into the depths. But gold does not melt but solidifies, as pressure on the depths grows faster than temperature. Precious metals are now trapped in Earth’s mantle. And this is when convection occurs. Over the course of billions of years, hotter parts of the mantle gradually rise and cooler parts of the mantle sink. While purely metallic impact remnants would be too heavy to be carried up with this magma current, this is not the case for metal-rich mantle rocks from now former transition zone.

As per latest studies performed by Jun Korenaga and Simone March, published in ‘Vestiges of impact-driven three-phase mixing in the chemistry and structure of Earth’s mantle’. www.pans.org


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Artist's conception of the dust and gas surrounding a newly formed planetary system. Image Credit: NASA

These are predominantly slow and lengthy processes. Let’s consider for a moment Witwatersrand in South Africa – geological formation legendary for its abundance of precious metals, hence considered somehow an anomaly. Late Archean Witwatersrand Basin consists of a 5-7 km layer of mainly sedimentary rocks laid down over a period of about 260 mln years, starting approximately 2.97 bln years ago. And apart of geological processes of epic magnitude and proportions, we cannot forget about more ‘local’ - gold in the Witwatersrand Basin was deposited in Archean river deltas having been washed down from surrounding gold-rich greenstone belts.

And to conclude - heavier material moved towards the centre of the planetary clump while lighter material stayed on the periphery. Ergo, metals started to concentrate inside the proto-Earth. This is all still being heated at incredible temperatures by energy release, melting, and re-melting metals again and again. The results end up being the high concentrations of metals flowing inside the Earth’s core, to occasionally be pushed to the top through mantle and new crust formation or volcanic bursts and depositing the same inside rock on the earth’s crust. Processes spanning billions and millions of years, further enhanced by tectonic movements.

To be continued…

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