Gold (32 page)

Southwestern's share price later collapsed
:
Hutchinson, “Gold Mine's Results Transcended Belief”; and including Paterson sentence: David Baines, “Former Geologist Sentenced to Six Years in Prison for Assay Fraud,”
Vancouver Sun,
January 18, 2013,
http://www.van couversun.com/business/David+Baines+Former+geologist+sentenced+years+prison+assay+fraud/7841963/story.html
.

They raised another $25 million
:
See Mundoro Mining release, October 6, 2004, at
http://www.sedar.com
.

Instead of 79 percent of profits
:
See Mundoro Capital August 2, 2011, press release accepting deal, and calling it “the best current available alternative for shareholders of Mundoro to participate in the future development of the Maoling Gold Project,”
http:www.sedar.com
.

When China made the 1993 decision to encourage mine development, it allowed any Chinese company
:
X. D. Jiang, vice president of production and executive director, China Gold International Resources Corp. Ltd., interview with author.

Then it caught the eye of Robert Friedland
:
Friedland as billionaire: “The World's Billionaires,”
Forbes.
In March 2013, Friedland's net worth was said to be $1.8 billion:
http:www.forbes.com/profile/robert-friedland/
. Friedland as “Toxic Bob”: see for example Scott Condon, “ ‘Toxic Bob' vs. Wealthy Neighbors,”
Aspen Times,
July 16, 2009,
http://www.aspentimes.com/article/20090716/NEWS/907159977
; David Robertson, “ ‘Toxic Bob' Admits Defeat
in Power Struggle,”
Times
(London), April 19, 2012,
http://www.thetimes.co.uk/tto/business/industries/naturalresources/article3388506.ece
; Joshua Zapf, “Robert Friedland,”
Mining.com
, June 29, 2012,
http://www.mining.com/robert-toxic-bob-friedland-49502/
. Friedland cyanide spill: “Cyanide-Spill Suit Is Settled in Colorado,”
New York Times,
December 24, 2000,
http:www.nytimes.com/2000/12/24/us/cyanide-spill-suit-is-settled-in-colo rado.html
.

Chang Shan Hao presented a similar opportunity
:
I relied on X. D. Jiang for the chronology of Friedland/Jinshan involvement at Chang Shan Hao, as he was intimate with the development from the beginning. Jinshan press releases and material statements may be viewed at the website of China Gold International, which took over Jinshan:
http://www.chinagoldintl.com
, and enter “Jinshan” into the search field.

The year that China moved into first place
:
See United States Geological Survey, Gold Statistics and Information,
http://minerals.usgs.gov/minerals/pubs/commodity/gold/
.

Gold became a restricted commodity
:
X. D. Jiang and Greg Hall, interviews with author. See also for example “Foreign Investors' Gold Rush in China Restricted,”
http://www.chinastakes.com/2008/4/foreign-investors-gold-rush-in-china-restricted.html
.

Friedland was looking for money anyway
:
Trish Saywell, “Ivanhoe Sells Jinshan Stake,”
Northern Miner,
April 21, 2008,
http://northernminer.com/news/ivanhoe-sells-jinshan-stake/1000220684/
. See also “Ivanhoe Mines to Sell Controlling Stake in Jinshan Gold Mines to China National Gold Group Corporation,” joint press release from parties, April 10, 2008,
http://www.turquoisehill.com/i/pdf/2008-04-10_NR.pdf
.

Eventually Friedland's joint venture partner in Mongolia
:
Euan Rocha, “Friedland Exits as Ivanhoe, Rio Sign Finance Deal,” Reuters, April 18, 2012,
http://www.uk.reuters.com/article/2012/04/18/uk-ivanhoe-rio-idUKBRE83H0WL20120418
;
Ian Austen, “Mining Chief Resigns as Part of Deal with Rio Tinto,”
New York Times,
April 18, 2012,
dealbook.nytimes.com/2012/04/18/mining-chief-resigns-as-part-of-deal-with-rio-tinto/
.

Inner Mongolia's fountain of coal
:
Ben Woodhead, “Where China's Million Millionaires Live,”
BRW
(
Business Review Weekly
), August 2012,
http://www.brw.com.au/p/sections/eco/where_china_million_millionaires_hlqEoC5O8nBfGHR8YNcMwJ
; see also Kristine Lim, “Ordos Millionaires Fuelling Property Boom in Inner Mongolia,”
channelnewsasia.com
, August 29, 2011,
http://www.allvoices.com/news/10186482-ordos-millionaires-fuelling-property-boom-in-inner-mongolia
.

A month before I visited in June of 2011, Mongol protests
:
Andrew Jacobs, “Chinese Try to Appease Mongolians,”
New York Times,
May 29, 2011,
http://www.nytimes.com/2011/05/30/world/asia/30mongolia.html
.

China executed the truck driver
:
“China Executes Truck Driver for Running Over Mongolian Herder,” Associated Press, August 25, 2011,
http://www.guardian.co.uk/world/2011/aug/25/china-truck-driver-executed-mongolian-herder
.

Chang Shan Hao had nineteen drill rigs
:
X. D. Jiang, interview with author; mill expansion and production forecast from “China Gold International Resources Provides Preliminary 2012 Operating, Production and Exploration Highlights and 2013 Outlook,”
http://www.chinagoldintl.com/i/pdf/NR-Jan-29-2013.pdf
.

The mining contractor was China Railway
:
For the size of China Railway, see for example Wu Zhong, “Blowing the Whistle on ‘Big Brother,' ”
Asia Times,
May 7, 2008,
http://www.atimes.com/atimes/China/JE07Ad01.html
.

Notoriously corrupt
:
“Ex China Rail Minister Liu Zhijun Charged with Corruption,” BBC News, April 10, 2013,
http://www.bbc.co.uk/news/world-asia-china-22089011
.

In the 1980s, before China opened exploration to Western companies, the government tried to stimulate production
:
Gong and Zhu,
The Gold Mining History of Zhaoyuan,
91–92. Gong and Zhu cite “Circular About Key Points in Increasing Production of Gold and Silver,” issued August 30, 1985, by the State Council, stating in part its purpose as “invigorating the gold economy and taking care of gold industry.”

Gold seekers ransacked prospective ground
:
X. D. Jiang, interview with author; also Gong and Zhu,
The Gold Mining History of
Zhaoyuan
,
94.

In 1988 the Chinese government reversed its liberalizing policy
:
Gong and Zhu,
The Gold Mining History of Zhaoyuan,
102, 117.

In 1989 the
Christian Science Monitor
:
James L. Tyson, “Farmers Drop Hoes to Dig for Gold,”
Christian Science Monitor,
November 21, 1989,
http://www.csmonitor.com/1989/1121/drush.html
.

In Henan province, 178 small-mining teams
:
Gong and Zhu,
The Gold Mining History of Zhaoyuan,
117.

In an incident at the Wenyu mine
:
Ibid., 118.

Even large state companies used
min cai
to recover hard-to-get-at ore
:
Ibid., 30.

But in 2001, in another shift of central government sentiment
:
Ibid., 31.

In 1995 “gold lords” and their bands of peasant miners were still defying the government
:
Patrick E. Tyler, “Gold Hunters, Defying Beijing, Mine Vast Areas of Rural China,”
New York Times
, July 17, 1995,
http://www.nytimes.com/1995/07/17/world/gold-hunters-defying-beijing-mine-vast-areas-of-rural-china.html?pagewanted=all&src=pm
.

In 2012, nomadic Tibetan shepherds in Qinghai
:
Marc Howe, “Tibetan Nomads Clash with Gold Miners over Sacred Mountain,”
Mining.com
,
August 13, 2012,
http://www.mining.com/tibetan-nomads-clash-with-chinese-gold-miners-over-sacred-mountain-50519/
.

In 2010 the World Gold Council warned: China Gold Report
: Gold in the Year of the Tiger
(London: World Gold Council, 2010), 62–63.

The China-running-out-of-gold scenario raises the specter of “peak gold”
:
See for example Liezel Hill, “Iamgold Sees ‘Peak Gold' Forging $2,500 Price,”
Bloomberg,
January 17, 2013,
http://www.bloom berg.com/news/2013-01-17/iamgold-sees-peak-gold-forging-2-500-price.html
; Ambrose Evans-Pritchard, “Barrick Shuts Hedge Book as World Gold Supply Runs Out,”
Telegraph,
November 11, 2009,
http://www.telegraph.co.uk/finance/newsbysector/industry/mining/6546579/Barrick-shuts-hedge-book-as-world-gold-supply-runs-out.html
; Richard Kerr, “Is the World Tottering on the Precipice of Peak Gold?,”
Science,
March 2, 2012, 1038–39,
http:www.sciencemag.org/content/335/6072/1038
.

C
HAPTER
9: T
HE
S
PIDER

The volume of bullion coming to market today
:
United States Geological Survey, “Gold Statistics and Information,”
http://minerals.usgs.gov/minerals/pubs/commodity/gold/
, 2012 world production 2,700 tons. Gold today as multiple of Spanish imports in sixteenth century: there are no reliable figures for world production, but here is my back-of-the-envelope calculation. I took pre-sixteenth-century world supply of 42 tons from Bernstein,
The Power of Gold
(2 cubic meters). In the sixteenth century that supply grew by about five times. 210 tons minus 42 tons = 168 tons for a century's production, or 1.68 tons a year. Divide 2,700 tons by 1.68 = 1,607 times the earlier production.

In 2011, the total value of mined gold was about $143 billion
:
I took 2,700 metric tons production figure for 2011 from the United States Geological Survey, converted at 31 grams = 1 troy ounce, and used a mean gold price for 2011 of $1,650.

In one three-month period alone, 11 billion ounces of gold worth $15 trillion changed hands in London
:
Jack Farchy, “Sizing Up the Gold Market,”
Financial Times,
September 9, 2011,
http://www.ft.com/cms/s/0/eb342ad4-daba-11e0-a58b-00144feabdc0.html#axzz2NiR9WqWu
.

Most of the trade is in the hands of a cabal of banks in London
:
See
http://www.goldfixing.com
, and also for example Robert D. Hershey, Jr., “Gold ‘Fixing': London Tradition,”
New York Times,
February 12, 1979,
http://query.nytimes.com/mem/archive/pdf?res=FA0 E1EFD3A5413718DDDAB0994DA405B898BF1D3
.

The London Bullion Market Association polled its members
:
See Farchy, “Sizing Up the Gold Market,” but I checked the calculation: 11 billion troy ounces = 341 billion grams = 341,000 metric tons = 126 times 2011 production of 2,700 metric tons (from the United States Geological Survey) and twice the 170,000 metric tons in the world.

The Spider is an exchange-traded fund
:
Spider account from author's interviews with Jason Toussaint and George Milling-Stanley, executives of SPDR Gold Shares.

There was more gold in the Spider's stash than in the central bank of China
:
At the time, China's stated reserves were about 1,000 tons, although the central bank was thought to have more. See “China Could Soon Announce That Their Gold Reserves Have Doubled,”
Business Insider,
January 22, 2013,
http://www.businessinsider.com/russia-turkey-ukraine-buy-gold-but-bullion-tiny-part-of-fx-reserves-2012-8
; “The World's Biggest Gold Reserves,” CNBC,
http://www.cnbc.com/id/33242464/page/10
.

Some of the owners' positions show up in 13F filings
:
See for example “Soros Doubles Down on Gold,”
New York Times,
February 2, 2010,
dealbook.nytimes.com/2010/02/17/soros-doubles-down-on-gold/
.

In a DealBook column
:
Steven M. Davidoff, “How to Deflate a Gold Bubble (That Might Not Even Exist),”
New York Times,
August 30, 2011,
dealbook.nytimes.com/2011/08/30/how-to-deflate-a-gold-bubble-that-might-not-even-exist/
.

Goldline's most famous pitchman is Glenn Beck
:
Eduardo Porter, “All That Glimmers,”
New York Times,
November 7, 2011,
http://nytimes.com/2011/11/08/opinion/all-that-glimmers.html
.

Television business commentators predicted
:
“$4,000 Gold? A Billionaire's Remarks at a Private Club Rivet New York,”
New York Sun,
September 30, 2010,
http://www.nysun.com/editorials/4000-gold/87099/
; James O'Dell, “Paulson Predicts $4,000 Gold,” Morgan Gold, May 5, 2011,
http://www.morgangold.com/news/20110505-paulson-predicts-4000-gold.html
.

Leaving aside the holdings of gold coin speculators
:
2,250 metric tons in ETFs: Davidoff, “How to Deflate a Gold Bubble.”

On November 3 the Santa Monica, California, city attorney
:
Stuart Pfeifer, “Goldline Metals Dealer Is Charged,”
Los Angeles Times,
November 3, 2011,
http://articles.latimes.com/2011/nov/03/business/la-fi-goldline-charges-20111103
.

Goldline agreed to refund as much as $4.5 million to buyers
:
Matthew Mosk, “Goldline Agrees to Refund Millions to Customers,” ABC News, February 22, 2012,
http://www.abcnews.go.com/Blotter/goldline-agrees-refund-millions-customers/story?id=15768897
; Stuart Pfeifer, “Goldline Agrees to Refund up to $4.5 Million to Former Customers,”
Los Angeles Times,
February 23, 2011,
http://articles.latimes.com/2012/feb/23/business/la-fi-0223-goldline-settlement-20120223
.