For the lack of monetary economics, we have this storyFor the lack of monetary economics, we have this story

Versions of it comes up now and again; gold is bad money because its mining ruins nature. We have echoes in this in Bitcoinland, too: bitcoin is bad money because it consumes electricity. (compared to what? Is it worth it?)

It's superficially quite tempting a story: if we demonetize gold and its price goes to well below its monetary-premium-infused $4,500 cuckbucks (#1290624), way fewer people will extract gold from the world's most precious natural environments, legally or illegally. Prices are powerful like that.

"The mine poisons the workers. The gold underwrites terrorism and cocaine trafficking.""The mine poisons the workers. The gold underwrites terrorism and cocaine trafficking."

Also, as we've learned via Oliver Bullough's book, money laundering is good... (#1453638, #1467656) or at least neutral in that crimes, horrors, and destruction that touch money (or in this case, monetary metals) is completely separate from the virtues of the money itself. Bitcoin isn't good or bad because criminals use it; it just is. (And it makes zero sense to try and police horrors via making the entire monetary system worse.). Gold isn't good or bad because it comes from pretty awful places of corruption, mercury poisoning, and environmental destruction.

"But how do you stop illegal gold at $5,000 an ounce, when even the U.S. government is buying?""But how do you stop illegal gold at $5,000 an ounce, when even the U.S. government is buying?"

Correct question. Prices rule; laws and moral indignation don't.

Gold prices hover around $5,000 an ounce, about four times the price of a decade ago. That gives criminal organizations and fly-by-night operators a huge incentive to mine in wasteful, destructive and risky ways.

Every year, the United States Mint sells more than $1 billion of investment-grade gold coins. Each is stamped with an icon like the bald eagle, signifying the government’s guarantee, required by law, that the gold is 100 percent American.
We tracked hundreds of millions of dollars in foreign gold entering the Mint’s supply chain in recent years. That includes secondhand gold, with provenance that is difficult or even impossible to determine, and gold from countries like Colombia and Nicaragua, where the industry is linked to criminal groups.

“To hold a coin or medal produced by the Mint is to connect to the founding principles of our nation,” the Mint declares.“To hold a coin or medal produced by the Mint is to connect to the founding principles of our nation,” the Mint declares.

The Mint is actually the last link in a chain that launders foreign gold, much of it illegally mined, for an insatiable market.
The Mint buys gold that originates in a Colombian drug cartel mine. It makes Lady Liberty coins out of gold from Mexican and Peruvian pawn shops and from a Congolese mine that is part-owned by the Chinese government, records show. Some Mint gold has come from a company in Honduras that dug up an Indigenous graveyard for the ore underneath.

The questions are the same we posed in Bullough's investigation into money laundering. For how many hops back in a money's transaction chain am I responsible? The sane, sensible answer is zero... or given certain conditions (knowledge of the crime, immediate proximity etc), perhaps one. But the moral outrage and purity here is absurd.

There's an ever-increasing market price, there's a separate black market and a regulated neat, legal market; like water flowing down the mountain, the gold will find its way! Also, the physical gold atoms (and other precious metals) have been around forever, meaning at some point, somewhere, all the world's gold touched something bad.

Is the only pure gold the ones coming straight from a (regulated, environmentally conscious, tax-paying) mine? Is the only pure bitcoin the ones straight from a renewable-energy powered coinbase transaction?

Gold mining funds Sudan’s brutal civil war and Russia’s invasion of Ukraine. Surging gold prices have helped Venezuela and Iran temper the effects of financial sanctions. Colombia’s biggest cartel, the Clan del Golfo, traffics in gold alongside cocaine — and uses the proceeds to maintain control through murder and bombings. Illegal miners deforest and pollute the Amazon, poisoning people there with mercury. [Terrorist groups, including some linked to Al Qaeda, are getting into the gold business, too.
The easier it is to sell this gold on the world’s legitimate exchanges, the easier it is to make war, sustain an autocracy, launder money or destroy the environment. Drug cartel gold ending up at the U.S. Mint is one example of that process in action.

Correct, but ALSO the nature of money...#780358Correct, but ALSO the nature of money...#780358

If we waved a magic wand and gold never existed on this planet, these baddies would have used something else. You gonna go down the chain of every alternative monetary metal or store of value and be upset about those too...?

TRAVEL ADVENTURE:
Dudes went on a road trip from Medellín in search of gold mining sites.

It was clear that the Colombian government had long ago lost control. The roadside sign was charred black. An old man raised fighting roosters. All around, workers were grinding up the land, openly flouting a ban on mining.
The miners call the ranch La Mandinga, a name for an evil spirit.

They work in open-air mines, using excavators and high-pressure hoses to turn La Mandinga’s hillsides into mud. Picking the tiny flecks of gold from that muck is impossible, so the miners mix the mud with mercury and stir by hand until the mercury binds to the gold.

"All of this is illegal, environmentally destructive and toxic.""All of this is illegal, environmentally destructive and toxic."

Sure, because we all know that laws against e.g., gravity, reliably stop people from falling.

Mr. Cuevas burns off the mercury with a blowtorch, weighs what is left and pays out cash — $2,500 for miners who had a good day, $50 or less for the unlucky. At the end of the night, he melts the gold together in a crucible and pours it into a mold.

Details here are pretty grim, not gonna lie. How to launder the gold, obscure its real-world blockchain tracking? Just pretend the documents at source are real:

Mr. Cuevas showed us ledger entries on the shop’s computer. His suppliers from La Mandinga, he said, have registered under a Colombian program for small-scale miners, or barequeros. Nearly anyone can get a license, as long as they mine in authorized areas using only hand tools and no mercury.

Of course, La Mandinga’s workers are not mining only with hand tools. Or in authorized areas. And they are using mercury. Mr. Cuevas knows all of this. He mines in La Mandinga himself. But it is not his job to look beyond the paperwork. And the Colombian authorities rarely examine barequero gold’s origins to determine legality. Instead, they ask one question: Does it have paperwork?

And Mr. Cuevas does. He says each gram he buys is linked to a licensed miner. Every shop that sells gold for legal export keeps these ledgers, he says.

And then it goes to America, a refinery called Dillon Gage outside Dallas.

workers dump the imported gold into a glowing cauldron, mixing it with molten gold from other suppliers: South American mines, secondhand U.S. jewelry dealers and Peruvian pawn shops, according to records and interviews. But to Dillon Gage’s customers, once that gold leaves the Dallas cauldron, it ceases to be foreign. Dillon Gage is in the United States and mixes American gold with Colombian gold. So, the industry logic goes, the end product must be American.

La Mandinga is just one of many cartel-controlled mines in the region. Mr. Cuevas works at one of hundreds of shops in just one city. There are many exporters, and even more buyers. In this trillion-dollar market, notorious for fraud and money laundering, the distinctions between dirty gold and clean exist mainly on paper. Unless a customer is willing to check, the distinctions melt away. The Mint does not check.

TL;DR: you pretend the original bad gold is good (via authorities looking the other way), you mix it in with real, good gold along a few transaction hops, and passing it along to the next guy in the chain magically makes it all good.

Fair enough, good reporting -- I'm happy it's out there. But not sure it matters too much, since you're missing the core monetary financial-gravity insight

Value will flow, baddies will use money too.Value will flow, baddies will use money too.

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