As regards the opening-up of new countries for the world economy, it
seems to be quite obvious that this cannot be considered an outside
factor which will satisfactorily explain the origin of long waves. The
United States have been known for a relatively very long time; for some
reason or other they begin to be entangled in the world economy on a
major scale only from the middle of the nineteenth century. Likewise,
the Argentine and Canada, Australia and New Zealand, were discovered
long before the end of the nineteenth century, although they begin to be
entwined in the world economy to a significant extent only with the
coming of the 1890’s.
» We know that commodity prices reach their lowest level toward the end of a long wave. This means
that at this time gold has its highest purchasing power, and gold production becomes most favorable. «
Second Transvaal Gold Rush: Miners of the Republic Gold Mining Company, De Kaap Valley, Eastern Transvaal gold fields, South Africa, 1888.
It is perfectly clear historically that, in the
capitalistic economic system, new regions are opened for commerce during
those periods in which the desire of old countries for new markets and
new sources of raw materials becomes more urgent than theretofore. It is
equally apparent that the limits of this expansion of the world economy
are determined by the degree of this urgency. If this be true, then the
opening of new countries does not provoke the upswing of a long wave.
On the contrary, a new upswing makes the exploitation of new countries,
new markets, and new sources of raw materials necessary and possible, in
that it accelerates the pace of capitalistic economic development.
There remains the question whether the discovery of new gold mines,
the increase in gold production, and a consequent increase in the gold
stock can be regarded as a casual, outside factor causing the long
waves. An increase in gold production leads ultimately to a rise
in prices and to a quickening in the tempo of economic life. But this
does not mean that the changes in gold production are of a casual,
outside character and that the waves in prices and in economic life are
likewise caused by chance. We consider this to be not only unproved but
positively wrong.
» An increase in gold production leads ultimately to a rise in prices. «
California Gold Rush (1848–1855): Over 300,000 settlers flooded newly conquered Mexican
This contention originates from the belief, first,
that the discovery of gold mines and the perfection of the technique of
gold production are accidental and, secondly, that every discovery of
new gold mines and of technical inventions in the sphere of gold
production brings about an increase in the latter. However great may be
the creative element in these technical inventions and the significance
of chance in these discoveries, yet they are not entirely accidental.
Still less accidental—and this is the main point—are the fluctuations in
gold production itself.
These fluctuations are by no means simply a
function of the activity of inventors and of the discoveries of new gold
mines. On the contrary, the intensity of inventors’ and explorers’
activity and the application of technical improvement in the sphere of
gold production, as well as the resulting increase of the latter, depend
upon other, more general causes. The dependence of gold production upon
technical inventions and discoveries of new gold mines is only
secondary and derived.
» Although gold is a generally recognized
embodiment of value, it is only a
commodity. «
Grasberg Mine, operated by PT Freeport Indonesia, is one of the largest global gold and copper reserves, producing 1.7M oz gold, 6M oz silver, and 1.5B lbs copper in 2023.
When is the relation of the value of gold to that of
other commodities most favorable for gold production? We know that
commodity prices reach their lowest level toward the end of a long wave.
This means that at this time gold has its highest purchasing power, and
gold production becomes most favorable. This can be illustrated by the
figures in Table 2.
Table 2.— Selected Statistics of Gold Mining in the Transvaal, 1890–1913.
Gold production, as can be seen from these
figures, becomes more profitable as we approach a low point in the price
level and a high point in the purchasing power of gold (1895 and the
following years). It
is clear, furthermore, that the stimulus to increased gold production
necessarily becomes stronger the further a long wave declines. We,
therefore, can suppose theoretically that gold production must in
general increase most markedly when the wave falls most sharply, and
vice versa.
» Gold production must in
general increase most markedly when the wave falls most sharply, and
vice versa. «
Wangu Gold Deposit, 2024: China discovered one of the world’s largest gold deposit
in Hunan, with over 1,000 tons valued at $83B, located 19 kilometers underground.
In reality, however, the connection is not as simple
as this but becomes more complicated, mainly just because of the effect
of the changes in the technique of gold production and the discovery of
new mines. It seems to us, indeed, that even improvements in technique
and new gold discoveries obey the same fundamental law as does gold
production itself, with more or less regularity in timing. Improvements
in the technique of gold production and the discovery of new gold mines
actually do bring about a lowering in the cost of production of gold;
they influence the relation of these costs to the value of gold, and
consequently the extent of gold production.
» Improvements
in the technique of gold production actually do bring about a lowering in the cost of production of gold. «
Kumtor Gold Mine, Kyrgyzstan, 2025: Nationalized in 2021, one of Central Asia’s largest gold reserves, began underground mining, projected to add 147 metric tons of gold to state reserves over 17 years.
But then it is obvious that
exactly at the time when the relation of the value of gold to its cost
becomes more unfavorable than theretofore, the need for technical
improvements in gold mining and for the discovery of new mines
necessarily becomes more urgent and thus stimulates research in this
field.
» Gold production is subordinate to the rhythm of the long waves. «
Muruntau Gold Mine, Uzbekistan, 2025: Holds the world’s largest gold reserves, one of the largest open-pitgold mines, ranks second in global production, producing 2M+ oz annually, expected to operate for decades.
There is, of course, a time-lag, until this urgent necessity,
though already recognized, leads to positive success. In reality,
therefore, gold discoveries and technical improvements in gold mining
will reach their peak only when the long wave has already passed its
peak, i.e., perhaps in the middle of the downswing. The available facts
confirm this supposition. In the period after the 1870’s, the following
gold discoveries were made: 1881 in Alaska, 1884 in the Transvaal, 1887
in West Australia, 1890 in Colorado, 1894 in Mexico, 1896 in the
Klondike. The inventions in the field of gold-mining technique, and
especially the most important ones of this period (the inventions for
the treatment of ore), were also made during the 1880’s, as is well
known.
» The increase in gold production takes place somewhat earlier
than at the end of the downswing of the long wave. «
Lafigue Gold Mine, Ivory Coast, began production in August 2024, targeting 200,000 oz gold annually over 13+ years.
Gold discoveries and technical improvements, if they
occur, will naturally influence gold production. They can have the
effect that the increase in gold production takes place somewhat earlier
than at the end of the downswing of the long wave. They also can assist
the expansion of gold production, once that limit is reached. This is
precisely what happens in reality. Especially after the decline in the
1870’s, a persistent, though admittedly slender, increase in gold
production begins about the year 1883, whereas, in spite of the
disturbing influences of discoveries and inventions, the upswing really
begins only after gold has reached its greatest purchasing power; and
the increased production is due not only to the newly discovered gold
fields but in a considerable degree also to the old ones. This is
illustrated by the figures in Table 3.
Table 3.— Gold Production, 1890–1900 (Unit: thousand ounces).
From
the foregoing one may conclude, it seems to us, that gold production,
even though its increase can be a condition for an advance in commodity
prices and for a general upswing in economic activity, is yet
subordinate to the rhythm of the long waves and consequently cannot be
regarded as a causal and random factor that brings about these movements
from the outside.
See also:
» Since the Kondratieff wave was not a transverse wave, meaning the wavelength varied, this tends to imply we may see the “real” high in commodity prices (adjusted for inflation) form in line with the ECM in 2032. This is by no means a straight, linear progression. There will be booms and busts along the way. Therefore, that is when we will see the final REAL high in gold, agriculturals, metals, etc.
« Martin Armstrong, March 16, 2013.
