The Gold Standard

In September 2006, an interesting meeting took place in Bentonville, Ark., near the headquarters of the world’s largest retailer of jewelry. What was interesting was that the meeting was between competitors, adversaries and opportunists. Wal-Mart, Tiffany and Zales representatives sat down for six hours in a roundtable discussion with Earthworks (coordinator of the "No Dirty Gold" campaign at www.nodirtygold.org), Ethical Metalsmiths, GoldKarat and recyclers American Retroworks Inc., Recellular, Collective Good and Noranda Recycling. Eric Harris of ISRI (Institute of Scrap Recycling Industries Inc.) and Kate Krebs of the NRC (National Recycling Coalition) were updated on the meeting by phone and ECS, Abington Metals, Colt Refining and Umicore provided advice and data.

The topic was "recycled gold"—What is it? What are the rules for marketing it? Is there a difference between "pre-consumer" and "post-consumer" gold? Is "recycled gold" the "market correction" for scrap electronics exports (where gold from circuit boards is often recovered through environmentally risky "aqua regia" processes)? Or will more people buying more "recycled" gold just increase demand for gold overall? Is there any hope to curb the worst environmental practices without the active involvement of the jewelry industry? How can that industry constructively participate with ecologists who may doubt the fundamental value of their business?

In some ways, the discussions around recycled content gold turn the scrap paper precedent on its head. The accepted "recycled content" label for office paper was effectively set in the 1990s with the federal government’s standard of 20 percent post-consumer content. Unlike paper, individual consumers buy the lion’s share of gold. (Industrial uses are under 35 percent of consumption, according to USGS.gov.). "Post consumer" gold (old jewelry) is actually the easiest gold to recover, unlike gold in circuit board overruns at computer manufacturers or metal sludge from industrial tanks. And while no one could imagine that the availability of recycled paper would cause people to use more paper, it’s easy to imagine a consumer being attracted to the recycled-content label on a bracelet or pendant and buying a gift they otherwise would not have thought highly of.

The group generally identified that there is gold in the waste stream (e.g. in used computers) and that getting that gold out of the waste stream and into the market was a shared goal. Everyone seemed to agree that disputes over the meaning of the term "recycled" could undo the marketing and that most buyers of most gold won’t put a major premium on environmental claims. A tantalizing beginning, but the group has made no plans to meet again, and the "recycled standard" remains up for grabs without a federal purchasing agent to make the final call.

GOLD EXTRACTION: WORST PRACTICES. While it is difficult to quantify the environmental damage done for the sake of gold, it seems likely that 20 percent of gold recovery produces 80 percent of pollution. In the spring of 2006, the Wall Street Journal published a front-page story on the "unintended consequences" of mercury recycling programs in the United States. Apparently the biggest end market is for small, artisan, unregulated gold mining in Africa and South America (where the mercury is used to "float" gold out from stream residue). EPA Region 9 (western USA) published a toxicity report in 2002 that showed mercury from gold, silver and copper mining produced more mercury pollution than all solid and hazardous waste, power plants and incinerators combined.

The criticism of electronics recycling in Asia by groups like Silicon Valley Toxics Coalition (SVTC), San Jose, Calif., also center largely on the process of "aqua regia" and other acids used to cull gold from printed circuit boards. Arguably this is the single most environmentally harmful recycling practice in Asia. It is also not particularly effective as a method of gold recovery, as a lot of rare earth metals go un-recovered in the acid sinks in Guiyu, China, compared to more formal circuit board recycling practices.

Getting consumers and retailers to stay away from the very worst, most environmentally sensitive mining projects is the primary goal of organizations like Earthworksaction.org. Tiffany sponsored a full-page advertisement in section A of the Washington Post in the past year, accepting the Earthworks call to shun metals mined from a site in Montana.

Just as McDonald’s has been credited with reforming the worst practices in the beef industry, jewelers have the potential to play a pivotal role in dampening demand for gold extracted from rain forests and salmon fisheries. A process to sell "greener gold" seems like a natural step.

BEST PRACTICES: POST-CONSUMER CONTENT. Recycling itself is old hat, going back to the second arrowhead. Until recently, hardly anyone ever threw away anything made of metal, and metals were not so commingled with ceramics and other metals to make them difficult to extract. Most of the gold used today is in fact recycled. The free market is a beautiful thing.

Not all gold is recovered, however, and a "buy recycled" campaign could have a number of beneficial impacts.

Companies like Abington Metals in Philadelphia, ECS Refining in California and Texas and Colt Refining of New Hampshire have made considerable investments in refining gold from scrap materials and are constantly struggling against a poorly understood and under-regulated scrap economy overseas. Many U.S. computer collectors like the prices offered by these processors, but balk at paying employees to separate the metals. While the metal recycling in the "informal" export sector is less capable of capturing gold, rhodium and other precious materials, the cost of labor to disassemble the computers is much lower. Meanwhile, the cost of virgin material is kept in check by federal subsidies.

For recyclers, competing against overseas methods and cheap virgin supplies is nothing new. Enlisting "buy recycled" campaigns to help demand has proven an effective counter-strategy in the past.

In the early years of paper recycling, scrap paper was not recovered for environmental reasons, but because older paper mills could not chase after receding (or suburbanized) forests. Many paper mills switched to scrap paper (from tree pulp or rags) as a lower energy and more affordable feedstock.

At the gold recycling meeting in Bentonville, many of the same considerations were discussed. If old jewelry has never been discarded as waste, does recycling it really solve a problem? Should "best practices" narrowly target a "post-consumer waste" stream? How should post-consumer be defined? Most agreed that the primary goal is that legitimate recyclers of cell phones, circuit boards or other high-investment scrap should somehow be rewarded by the purchase of recycled gold content and most agreed that a "boycott" of gold would hurt those recyclers as much or more than it hurt dirty mining practices.

One challenge came up, however, in comparing gold recycling to paper recycling. The nice thing about recycled paper was that people didn’t buy more paper than they needed. The federal government was never tempted to print more paper just because it contained recycled content. Every recycled paper purchase decreases the demand for virgin paper. But a green, "recycled" label on gold could trigger an impulse purchase or cause someone to choose a necklace or ring as a gift. Without a narrow standard, products labeled as containing 20 percent post-consumer content could theoretically increase mining. If humans buy 50 percent more gold with 20 percent post-consumer content, more mining (30 percent) and mining pollution will result.

GUIDELINES. The old lessons about the value and romance of gold will be hard to budge. Accepting that the marketing of gold and other jewelry has been tremendously successful, how do we best temper its impact on the planet? The No Dirty Gold Campaign seeks to single out the worst environmental mining activities and to get major retailers to avoid them. However, like the petroleum market, gold is volatile and traded on paper. Boycotting one supplier will have no effect if the gold simply changes ports and demand remains the same.

When gold is transacted around a marriage or engagement, a lot of other people with old ideas will be looking over your shoulder. Making a political or environmental statement to the prospective family and friends of your loved one may be difficult.

We should be cautious not to inadvertently stoke demand for mining by advertising gold that has never been discarded in a way that makes more people, such as environmentalists, want it. One way to control that is to limit the gold to wedding bands (the hardest gold habit for society to "kick"). Within that limit, the following spectrum shows different ways consumers might limit gold mining (percentages for illustration; gold karat is different by volume and weight):

The New York Times has featured the environmental costs of gold consumption in a series of front-page articles, and Hollywood is making new movies about "blood diamonds." If there is no agreement about recycled content between sellers and environmentalists, it’s not impossible to imagine a boycott.

Some think that would result in "the war of the Amish," a threat to remove the protagonist from the battlefield, leaving the jewelry economy without a voice of conscience.

Others may feel that the best decision you can probably make is not to buy gold, or silver and other rare earth metals, at all and that, over time, that’s an economic message. Source reduction could also play a part, if more consumers begin to accept something less than 14K gold.