There are still a lot of gold deposits in the soil of the US state of California, and many people think that extracting them is a pretty good idea. It may seem crazy, given that 170 years have passed since the gold rush that fundamentally changed the American West. However, some companies are buying old mines and trying to reopen them – mostly in the northern city of Grasse Valley.
One of these mines, located in Nevada County, was closed in 1956, not because it ran out of gold, but for political and economic reasons. In 1944, the Bretton Woods Agreement established a new international monetary system aimed at providing exchange rate stability. Part of that effort is the decision to set the price of gold at $ 35 per ounce of 28 grams. This change makes the extraction of the precious metal unprofitable.
At the moment the situation is different. The price of gold is no longer fixed and it is becoming more expensive as a result of economic uncertainty due to the pandemic of KOVID-19, writes the American digital publication “Endark”. The decision of the US Federal Reserve not to raise (so far) the key interest rate reduced the yield on government bonds and deposit accounts, making gold a more attractive investment.
Against the backdrop of rising inflation and renewed economic uncertainty over the Omicron option, demand for the precious metal remains strong despite some recent declines. In 2020, nearly 43 percent of the world’s gold consumption went to listed funds and central banks.
Meanwhile, metal mining technologies have improved. Thus, the mines are back in operation in places where this sector seemed dead (not only in the United States but also in Canada and Northern Ireland).
The United States still has 63,000 tons of gold deposits, a third of what has been extracted so far, experts say. The problem is that today it is more difficult to mine the precious metal than in the past, because it is very deep. Companies must decide how to handle the hundreds of tons of waste in the upper layers, which in many cases contain heavy metals – arsenic, mercury, lead and other toxic substances. Residents of Grasse Valley are still struggling with the damage caused by the previous heavy demand for gold.
Rise Gold, a listed mining company, is committed to mitigating some of the environmental impact of its new mine operations using a technique called paste to fill mine shafts. It involves injecting a mixture of water, mining waste and a binder (often cement) into mining tunnels and helping to reduce the amount of aboveground ore waste.
This approach has some scientific basis, but is only a partial solution and there is considerable uncertainty about its long-term impact. And while Rise Gold has strong support for the project in Nevada County, where Grass Valley is located, some locals are still skeptical, the paper said.
Given all these challenges, doubts remain about the economic viability of the whole gold exploration operation. Some economists are wondering what is the point of mining metal that eventually goes to bank vaults. Much of the value of gold depends on the cost of extracting it from the earth, says economist Dirk Baur. That’s why companies need to calculate the profits, costs and overall profitability of such an endeavor very well before succumbing to the new gold rush.
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