Gold, that magic metal ....

Since I was a kid, I was fascinated by gold - that yellow metal that my mother used to put around her left wrist in the form of a bangle. I am not obsessed with it like Auric Goldfinger, that James Bond villain in the book and film of the same name.

Gold is a heavy metal, with a specific gravity of 19.2 - meaning that it weighs 19.2 times heavier than water of the same volume. When you can simply lift a pail containing one gallon of water that weighs 10 pounds, you can't even budge an inch up if the pail had been filled with the same gallon of liquid gold which would then weigh 192 pounds.

70 percent of all the gold in the world is used in ornaments while the balance is used in industries (electricals, electronics), in medicine, coinage, even as decorative ingredients in foods.

Pure gold is soft, so soft that you can bite it with your teeth. It's so chemically inert that flakes of gold are sometimes consumed as foods. It does not react with oxygen. Hence it does not rust or tarnish, and therefore retains its "gold color" forever. For this reason, gold has been used as ornaments since time immemorial. It is not even attacked by acids such as hydrochloric, sulphuric or nitric. However, certain alkaline solutions of cyanides can dissolve it.

Gold is usually found as native gold i.e. gold in its elemental and metallic form. Remember the movie where you see veins of gold shining in the exposed rocks in McKenna's Gold starring Gregory Peck and Omar Sharif. One ridiculous scene in the movie was when one actress jumped and wallowed in a pool containing gold to emerge with her clothes covered in gold. Its ridiculous because the scene suggested that the gold was floating in the water when gold was actually so heavy that it would have remained deep in the water.

Gold can be found about anywhere in Malaysia. Ever hear about the Malay guy who discovered gold in his kampung in Lubuk Mandi, Trengganu. An apocryphal story has it that the rubber tapper guy was noticed by his village folks to be more and more prosperous by the day. From a bicycle, he had bought a motorbike and from a motorbike he had acquired a small car. His wife and children seemed to be better dressed than before. Certainly, it was not due to the income from his rubber small-holding for how much could he improve on his income when rubber price was low. To be sure, there was a change in the work attitude of this humble and poor rubber tapper. He became hardworking all of a sudden and never missed a single day to tap rubber from his small rubber plot. His village friends were naturally curious. They also noticed that he went to tap rubber in late morning or in the early afternoon, and since when do people of the kampung, indeed rubber tappers all over Malaysia, tap rubber at such a late time of the day. The normal time is always in the early morning, usually, after the early morning prayer. Finally, his friends asked him about how well he had done for himself and what was the secret to his success. Being humble and modest, he replied that his extra income came from forest products such as rattan vines that he sold to augment his income from rubber. No matter how much his friends goaded him to reveal his secret, he stuck to his story of hardwork, his rubber trees producing more latex, and so on. After several months, the humble rubber tapper finally revealed his secret. One morning, he said, while on his way to his rubber plot, he accidentally kicked a small pebble. He looked down to see what it was that made him stumble slightly. The pebble looked like a small piece of metal that unusually shone in the morning sun. He picked it up to notice that the pebble was unusually heavy for a stone. At once he thought it was gold. To assure himself that the stone was gold, he took it to the local goldsmith shop in a nearby town. The goldsmith at once verified that, to his great astonishment and delight, the stone was indeed a gold nugget worth several thousands of ringgit. From then on, his fortune changed for the better. Everyday, he went to the spot and collected gold nuggets to be sold at goldsmith shops in the town. He kept his secret well for many months until that fateful day when he could not keep it any longer. From that day on, the news spread like wildfire and soon the area was filled with people looking for gold. And that's how the  gold rush started in Lubuk Mandi.  

In Malaysia, gold is mined in a big way in Pahang where two companies are producing at fairly reasonable rates of extraction. One company is sited in Raub where gold was once mined by a now-defunct Australian company for decades. In fact, Raub means from a handful(raub) of earth that you pan, you can easily get gold. It is even true today that if you place a handful of earth from any area in Raub, you can get gold albeit in miniscule amount not worth your effort. Where else can you get gold in Malaysia ? In fact, almost everywhere. In the copper mines of Ranau, Sabah to the rivers in Kelantan and the eastern beaches of Johore, you can extract gold if you are resourceful enough.

more to come later....

What's with the Malaysian ringgit ..

I looked up the Wikipedia today on Bank Negara and, among other things written there, one of the objectives of the Bank was to issue the Malaysian Ringgit and to keep reserves in order to safeguard the value of the currency. I conclude, therefore, that the larger the reserves, the higher would the value of the Malaysian Ringgit be. From July 31st 2004 when its reserve was USD 54 billion, it gradually reached its peak of USD 125 billion in March 2007 before falling back to 31st October 2008 of USD 100.2 billion or RM 345.5 billion.

Shouldn't Malaysia maintain to keep its reserves higher and higher rather than allow it to go down. Shouldn't Malaysia keep on piling its reserve to equal and surpass that of Singapore. Shouldn't Malaysia set aside a certain amount of surplus income to ensure that the reserves always escalate and not withdraw when things get worse.

A small country like Singapore with a population of 4.5 million, with no natural resources,  has much more reserve than Malaysia. Singapore developed from the same start-up point as Malaysia, yet its reserve has gone up by leaps and bounds. I hear that its reserve is now some USD 330 billion, more or less on par with Taiwan, South Korea, and Hong Kong. Hasn't Malaysia got a competitive spirit to be one or two levels up on Singapore. Shouldn't Malaysia adopt a kiasu  attitude when it comes to this. 

How does a country accumulate its reserve. One way is from its trade surplus i.e. the positive difference between the value of its exports and the value of its imports for a period of, say a month or a year. The values are usually expressed in terms of the USD. The balance in the amount of surplus left (surplus for reserve - SFP), after operating expenditure, is set aside by the country to accumulate its reserve which may not be kept in the country's vaults. Conversely, a country's reserve declines by the same amount if its trade is in deficit i.e. if its SFP is negative. Another way is by having gold, since gold is a component of its reserve. Historically, gold has been used in trade as currency. A country with a mineable source of gold potentially stands to increase its reserve. Gold extracted from its ores or native sources, refined to 99.99 percent purity, and declared as the country's asset is internationally accepted as part of its reserve. A country like South Africa, Canada, or Russia - where gold is mined on a large scale - can easily increase its reserve and consequently, its purchasing power. [Latest is that China has overtaken South Africa as the world's largest gold producer by producing 276 metric tonnes of gold last year (2007) and is predicted to produce more as more goldfields are prospected].

to be continued and amended ...