Although diamonds are supposed to be forever, it’s the human love affair with gold that has been truly lasting. For thousands of years, since even before the time of King Tut, gold has been prized for its beauty and value. It’s no wonder, then, that so much gold is sitting in jewelry boxes and central bank vaults. The U.S. Geological Survey estimates that 171,300 tons of gold have been mined throughout history. And that total is rising by about 3,000 tons a year.
There’s nothing wrong with gold per se. The problem is that gold mining is extremely bad for the environment. Modern gold mining methods generate about 20 tons of toxic waste for every gold ring. Gold mining pollutes the air and water with toxic substances like cyanide and mercury. The leading cause of mercury pollution today, ahead of even coal-fired power plants, is gold mining. And it’s partly because of gold mining that the Amazon rainforest is being destroyed and that mercury levels in fish are so high.
How can the world continue to enjoy gold without wreaking havoc on the planet? One solution is for gold miners to use more eco-friendly mining methods. They could stop using mercury or stop dumping their toxic waste in rivers and oceans. But there’s an even better solution: the world could simply recycle more of the gold we already have.
Recycling gold makes a lot of intuitive sense. Gold can be recycled with no degradation in quality, so gold that was originally mined centuries ago is just as good as new. It can be recycled and repurposed without the need for any new mining at all.
And huge amounts of gold are on hand. Only a tiny amount of the gold that has been mined – about 3,600 tons – has been lost. The rest, totaling 167,700 tons, is still available. About half of that has been incorporated into jewelry. The rest has been locked in the vaults of central banks, held by private investors, or used to make other products like iPhones and dental fillings.
In 2012, if the world had re-used or recycled less than 3 percent of existing gold supplies, it could have satisfied 100 percent of global demand. And by recycling about 5 percent of gold jewelry, all the world’s gold needs could have been met last year.
What’s stopping the world from recycling or re-using more gold? Wouldn’t it be smart to use the gold we already have before digging any more gold mines so big they can be seen from space?
Actually, a lot of gold does come from recycled sources. In 2012, according to World Gold Council statistics, about 36 percent of the gold supply consisted of gold from existing jewelry and other products such as electronics.
That’s a start, but the current percentage may be temporarily inflated by unusual circumstances: a combination of high gold prices and weak economies. (Historically, about 30 percent of gold has been recycled.) Those factors have given people an incentive to exchange more gold jewelry for cash. From an environmental perspective, however, high gold prices are nothing to cheer about. The high price of gold has led to much more gold mining – and much more pollution overall.
Ideally, it would be possible to rely more on existing gold supplies and reduce the total amount of gold mining. What is the best way to begin?
Here’s one tempting solution: empty the vaults. Central banks and investors are currently net buyers, not sellers of gold. But suppose banks and investors decided to sell off their gold and invest in something more eco-friendly – say forests. All of this gold could easily meet the world’s jewelry and technology needs for 15 or 20 years.
Assuming gold prices continue to fall, something like this may happen. Jittery investors may start to sell more of their gold, reducing the need for gold mining. On the other hand, gold investment trends are driven by factors that are difficult to predict or control, like the strength of the world economy. A better long-term approach might be to focus on the jewelry market.
Two factors make jewelry a good place to start. First, the single biggest use for gold remains jewelry, not investing. (In the most recent economic quarter, jewelry made up 67 percent of gold demand.) Producing more jewelry from recycled gold therefore would prevent a lot of gold mining. In addition, jewelry is the biggest potential source of recycled gold, since it accounts for about half the gold sitting above ground.
Jewelry also has the advantage of being a product that is sensitive to consumer tastes. Witness what happened when Prince William gave Kate Middleton his mother’s sapphire and diamond engagement ring. Demand for sapphires shot up.
Suppose newly-mined gold became no longer acceptable in luxury jewelry. Suppose the world’s major jewelers committed to using only recycled precious metals. And suppose all jewelers made it a practice to accept gold jewelry for recycling, perhaps giving customers a credit toward the purchase of new jewelry. The fundamentals of the gold market could begin to shift. Demand for newly-mined gold would drop. Recycled gold supplies would go up. Gold mining would become less economical, and there would be much less need for it.
Could anything like this really happen? Ethical considerations are already part of the equation when consumers shop for diamonds. More and more people are avoiding blood diamonds and choosing diamonds with ethical origins. Consumer pressure could – and probably will – start to create a bigger role for recycled gold.
The only question is how long it will take before consumers begin to flex their muscles – and how much environmental damage will have been done before that happens.
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