March 1, 2009 – Gold And Silver Spot Prices

Recycling Gold from Waste Products

One of the most curious news stories in recent months has been the discovery that sewage coming from several industrial areas can yield a higher amount of gold per incinerated ton than some of the world’s most productive mines. Given the very high gold and silver spot prices that have emerged in early 2009, this could prove to be a very lucrative source of gold for some of the world’s leading national buyers. More importantly, what impact will this shifting focus of precious metal extraction have on gold and silver investments?

For starters, consider Japan, where fly-ash recycling technology has been put to use. Contrary to the impression given in several of the news articles written about the process, the gold in question is not coming from the diets of the Japanese people. Instead, researchers believe the gold is ultimately being input into the local water supply from industry throughout the Nagano prefecture. Some of these industries include several different types of precision electronics manufacturing in the area. In addition to this, it’s thought that some of the gold found in the millions of consumer electronic devices thrown into landfills each year have been leached into the local water supply.

So far, the region has made nearly 15 million yen from the processing of only 5 metric tones of incinerated sewage that was brought for treatment. That’s nearly 1,900 grams per ton – many times higher than would be considered a good return from a gold mine anywhere in the world. Just as sweepers will sometimes pay to be allowed to search for gold dust in an Indian jewelry shop, waste has suddenly become valuable because the economics of the system have changed.

Silver is also found and extractable, but far less value than gold. However, both gold and silver spot prices are on the rise – something that can’t be said for other semi-precious (or base) metals. Gold and silver bullion have thus far proven them as a hedge against crisis, given the behavior of other commodities.

With the increase in the price of gold and a downturn in consumer spending, many in the industrialized world (especially countries that don’t have productive gold mines, like Japan) are buying domestic gold. This has already happened in countries like India, where the sale of domestic jewelry or the reshaping of old jewelry has become commonplace while gold imports have virtually ceased.

Outside every major Japanese city, it has been shown that large deposits of all the precious metals can be found, ready to be re-mined and processed. Some of the semi-precious metals found include zinc, lead and copper. That said, the price of all these metals has taken a tumble since the fall of manufacturing in late 2008. In fact, these base metals are approaching historic lows (in terms of inflation-adjusted value).

Other more exotic minerals that will be important for future energy infrastructure are believed to be found in these urban mines. They are set to be come extremely profitable. Rhodium, indium and platinum are all used in “green” technologies, either to generate carbon-free electricity or to reduce pollution. These have the potential to become sources of great wealth, as alternative precious metal commodity prices begin to increase and draw attention from gold and silver investors.

In the meanwhile, sales of gold and silver coins will continue to satisfy a surging consumer demand for a relatively safe and stable haven to invest their savings. Both gold and silver spot prices have continued to retain and gain value while most industries, currencies and commodities are suffering deflationary pricing.

Arthur McGuire

March 1, 2009


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