Gold Mining

It seems to be that in modern society prevails the idea that during the days of the “gold rush” old-time miners dug out the majority of the totality of gold. This is simply not the case. While the early mining companies did exploit very easily the rich seams of gold in no way did they find or exploit most of them.

The idea that the largest part of these few seams of gold have already been found and exploited is due to the lack of activity in gold-mining since the beginning of the 40s, that is, until recently. During the gold rush early times it was mandatory -by law- to sell all the dug gold in the United States to the government, and at an arbitrarily fixed price. This pre-set price was probably considered good in those early times, but as time went by, inflation caused the exchange value of the dollar to fall; however the gold exchange rate pre-set by the law was kept steady by the government. While inflation caused mining operative costs turn expensive, the exchange rate for gold stayed the same. This made necessary to look for and exploit more gold each time in order to keep on being operative without generating any losses. Many of the mines that once were operative with great financial success eventually ended up closing due to inflation effects, as well as for the rate ser by the government.

In 1934, the fixed rate was high the troy ounce of pure gold went from $20.67 to $35. This caused an short-lived gold rush revival, where many of the old mines were re-opened and using more modern mining equipment and technology made them operative and profitable. But the Government´s fixed rate remained the same, inflation continued, and eventually the majority of the gold mines except the richest ones had to close.

In 1941, most of the gold mines that were still operating had to close because of war-efforts. When war was over very few of the mines were re-opened due to the increase in minimum salary and the great amount and diversity of jobs available everywhere. Besides, inflation remained the same as the $35 per troy ounce of pure gold.

Since those times until recently, there has been little activity in gold-mining. There is a lack of interest for the aforementioned, after all . . . who would want to go into gold-mining when this has been depreciated in its exchange rate 20 times in 120 years?

And that was the situation while the rate of exchange was arbitrarily kept fixed and the rate of inflation would keep on resting from its sales value. This is the main reason of the sayings, “All the gold has been found and dug out “, and “that is why no one is mining for gold.”