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Through: Frank Knopers
A vein of gold has recently been discovered in Uganda that, according to President Yoweri Museveni, accounts for $12 trillion in gold. A remarkable statement, because that is even more than the value of the total above-ground gold reserves. Yet several media outlets have picked up this report in recent weeks as if so much gold had really been discovered in this African country.
New soil research would have shown that the country has discovered 31 million tons of gold ore, most of it in the northeast of the country. This number is an estimate based on geophysical and geochemical analyses, Solomon Muyita of the Ugandan Ministry of Energy and Mines told Reuters. He added that these reserves account for 320,158 tonnes of pure gold, a volume that converts to the current Gold price represents a value of trillions of dollars.
It almost sounds too good to be true and it probably is. Throughout history, around 200,000 tons of gold have been mined worldwide. And since the precious metal has a considerable value, it is obvious that all the low-hanging fruit has been found by now. The chance that such a large amount of gold will be found today is very unlikely, given the fact that the precious metal is distributed in much lower concentrations over the earth's crust. Gold mining has also been taking place in Uganda for some time, which means that the most accessible sources have probably already been discovered there.
Today, according to the World Gold Council, an average gold mine extracts five to eight grams of pure gold from every ton of gold ore. If it's more than ten grams, that's already above average. If we assume a positive scenario with a gold content of ten grams per tonne, we arrive at a weight of 310 tonnes of pure gold with 31 million tonnes of gold ore. That's about one-tenth of the world's gold mine production in a year and as much as China's annual gold mine production. Still a significant volume, but worth $12 billion rather than $12 trillion.
So it seems that there has been a calculation error somewhere, because it is very unlikely that there is as much gold in a relatively small area in Africa as what has been extracted from the ground worldwide throughout history. Under the leadership of President Museveni, Uganda will further increase its production of gold, oil and other raw materials in the coming years. To this end, he also wants to attract money from foreign investors. Whether this is the right way to do that, only time will tell.
In 2019 and 2020, the African country already exported gold to the United Arab Emirates, Hong Kong and South Korea. The Chinese are also interested in the country's gold mining sector. For example, the Chinese mining company Wagagai has already invested $200 million in a new mine near the city of Busai. That is also the area where most of the new gold reserves have been discovered. End of 2016 Opened a gold smelter in the country to process mined gold from its own country and from neighboring countries.
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On behalf of Holland Gold, Paul Buitink and Joris Beemsterboer interview various economists and experts in the field of macroeconomics. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here to subscribe.
