The financial crisis and gold price souring in 2005 initiated a modern gold rush. One of these gold rushes started in 2007 in South America. It wasn’t a “legal” gold rush, as it wasn’t made by the gold mining companies. It was a dark one, illegal mining operations were the name of this gold rush in South America.
Gold has always been easy to find near the rivers, especially rivers near mountain areas. By looking on the map, we will find one of longest rivers in the world, if not the longest, the Amazon. To the east of the Amazon, there is Andes mountain chain. These vast areas haven’t been explored completely like African forests.
There were no major mining operations in South America like as the ones started in Africa in the 19th century. Major mining corporations started operating there after 2005. There were rumors of gold mined by Spanish conquistadors and legends of hidden gold cities, and these legends were revived. The Spanish wasn’t lucky in finding any, the rainforest beat them. But modern-age poor man now, armed with far more medical care, weapons and technologies that wasn’t available for the 18th century settler, started excavating this area again.
The rainforest of the Amazon is such a tremendous mineral deposit that wasn’t tainted, unlike the minerals leeched out of Africa. Brazil, Guyana, Peru, Colombia and Venezuela had similar geological structure like Africa. So, the illegal mining operations started.
A rainforest in Peru, “Madre de Dios” lost 60 square miles, with 10,000 artisanal miners searching franticly for gold. That was just one illegal mining operating site. There are many others in Brazil and Guyana, plus other mining operations in South America. A silent war broke out, with criminal activities such as murder and theft rising dramatically.
The problem is where does this gold mined go? Operations of this size, not just in Brazil, Peru and Argentina, also in Africa must produce quite the amount monthly. This gold is hard to be tracked as these people know they are breaking the laws, so they won’t talk. Plus, there is a gun pointed to their heads. All they know is some rich guys buy this gold from them.
The story so far is much like what happened in Africa in the past century. Unless something is done, we would see history repeating itself in the ugliest and the most brutal manner. This time, it’s not in a far-away land. It’s just on the front door of the world’s leading economy.
There is good news though; Brazil now is the head of the WTO, which might help improving the financial situation in South America. Other BRICS members also may support Brazil, if there was some common goal to help emerging economies. There is also good news for gold; all BRICS members’ population shares the common concept of gold.
BRICS are the big boys in the gold industry, if not the mining operations. These countries are the underground gold buyers and producers. Their governments might reject it on the political level, but in reality, these countries are the suppliers of our gold for jewelries. Otherwise, where does this gold we see in the local jewelry store come from? Jewelry stores can’t confirm for sure where they get their gold from. There is the WGC, but it’s not enough to monitor the whole gold supply chain. Plus, there wasn’t enough buzz to revoke legal acts, like the ones on the diamond industry.
To sum up, this gold mined from South America, vanish! It simply disappears from the gold supply map. The physical demand on gold is still high, and legal mining operations don’t meet the demand requirements. There is a gap here! Who actually buys this gold illegally mined from Africa, South America and East Asia?