COVID-19 The rush for gold is one of the ugliest...

The rush for gold is one of the ugliest market forces in the world

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As demand for gold skyrockets, artisanal mining and smuggling ramps up, financing conflict and corrupt politicians, risking human lives and destroying the environment. In the first report of our 5-part series, we look at the current state and worth of gold, amidst the coronavirus pandemic.

This is part 1 of a series.

On 14 July, the COVID-19 crisis prompted the World Gold Council to pronounce: ‘Investors have embraced gold in 2020 as a key portfolio hedging strategy. […] the pandemic will likely have a lasting effect on asset allocation. It will also reinforce the value of gold as a strategic asset.’ By 5 August gold had hit its highest price ever, at $2,048 an ounce.

While traders moved bullion at the press of a button, in Kamituga, a mining town in South Kivu Province, Democratic Republic of Congo (DRC), disaster struck. In the early afternoon of 11 September at least 50 young creuseurs, or artisanal miners, drowned in a river of mud when torrential rains flooded the ‘Detroit’ gold mines to the south of the city. Only one survivor was found by the hundreds of local people who flocked to the scene to help.

READ MORE London Bullion Market clamps down on illicit gold trade

A chain of young men stretched down from the mine entrance, framed by sturdy wooden beams, passing up buckets of mud as rescue workers searched for the trapped miners, some of whom had been working 40 metres underground in the makeshift shafts.

Kamituga has been a mining town since the 1920s, when large quantities of gold were discovered there, and a succession of big companies arrived. But it is Kamituga’s artisanal miners, along with the toolmakers, the traders and the transporters, who keep the local economy going.

Prices go down

While the coronavirus pandemic pushed up the gold price worldwide, local prices offered from buyers in Africa actually went down, says Joanne Lebert, executive director of IMPACT (formerly Partnership Africa-Canada), which works to improve natural-resource governance.

Patrick Smith
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