Commercialization of Gold and Markets

We should also look back and remember that the discovery of certain countries such as Peru was due to the legends that got to the ears of the Spanish that were in the area of the Caribbean, about treasures in gold and silver that existed in this country.

It is known, by the number of the rescues of places like Cuzco and Cajamarca, that the auriferous mining exploitation in the time of the Incas was very intense. In Cajamarca, according to registered documents, and from what has been said around five thousand kilograms of gold were obtained; and in Cuzco close to seven thousand kilograms, this means that 2 and ½ years of actual production, in physical gold.     

In either case, the gold for the Incas constituted into a good that was very appreciated and so much so that it was used, in the same way by other civilizations such as to represent their main god, the Sun; to decorate their temples; in jewelry for royalty; and most certainly, as a simple of riches and a means of power.

The importance of gold in the Incan culture lead them to great accomplishments, such as the mining expedition that Inca Roca organized, that was protected by fifteen thousand men of war in the territory of the feared Mashcos from the Machiguenga branch.

The Spanish did not waste their time in organizing production. Only twelve years after the foundation of Lima did they establish in Phara, the watchtower and strong square of the east of Puno, basin of the Inambari, in the auriferous territory of the province of Sandia.

A little while afterwards, the prince of Esquilache received around five thousand Indians so they could work in the alluvial deposits of Aporoma, that still have reserves for a good many years.

At the beginning of the Republic the production increased gradually until an average of 700 kilograms per year in 1835 but the wars of the Confederation Peruvian – Bolivian with Argentina and Chile, and then the consolidation of the borders with the limited countries, and wars with pretty much all of them, made the production decline to a level of 160 kilograms per year come 1890.

The ecnomic, mining and agricultural come back began again with Pierola and continued on with Romaña, Candamo y Calderon. In 1901 the mine code was announced that came to replace the Spanish legislation in the matter that was until then made effective.

By 1990 the average amount of annual production was of 1,1000 kilograms.

Later on in more modern times, the gold monetary pattern was reestablished, and the Peruvian pound that ended up having great international prestige and a reward on the sterling pound of gold, circumstance that caused the production to establish more firmly to where in 1929 it got to: 3,800 kilograms of gold.

It has been considered that the mining code of the 50´s highly influenced the creation of what is now actual modern mining. The value on the whole amount of production ended up quintupling by 1962.

During this time the production of gold did not run the same luck, the high production costs of the subterranean gold mines that were located in the provinces of Ica, Nazca, Caraveli, Pataz and Bolivar, with their complex metallurgic processes, gradually lost the profitability they had first obtained by the devaluation of the New Deal dollar, which was of 20 to 35 dollars per ounce.

The Peruvian gold mines resisted more than 20 years in front of a fixed gold price of $35, and finally they went progressively closing during the decade of the 50´s.

The work in the mines and gold washes of Carabaya, Sandia, and Quispichanchis ran the same luck, due to their main problem, which is the fact that these places were so difficult to access to.

In 1970 Peru imported 10 MT of gold. Another historic mining period began in 1972, when the Cerro Corporation was nationalized.

In 1971 the government of general Velasco, facing the demand of foreign money to import gold, monopolizes the commerce of gold in the country, naming the Banco Minero agent of the State, as a complementary measure to control of foreign currencies that was previously established.

The production of national physical gold started to go down due to several asserted measures that took place in that time, discounting the national producer and establishing a national service of development.

By the ending of 1972 the first official devolution of the American dollar came about since 1935, due to the push of the free market of London and the French government's pressure of De Gaulle demanding the adjustment of balances to the American treasure in their commercial scale with the USA in gold. 

One year later, the American government withdraws their gold back guarantee from their commercial scale.