Gold, arbitrage, and low wages

Although the streets in India aren’t exactly paved with gold, a few in Ahmadabad are at least flecked with it.

Motivating her are the estimated 5,000 gold and silver shops in this western city. As the 40,000 workers from the shops come and go, flecks of gold fall from their hair and clothes, to be scooped up by Gohel and other dhul dhoyas. Some enterprising collectors even follow workers home, raiding their sewer pipes for the muck from their showers.

And on the other side of the market:

Two miles away, in the Gomtipur neighborhood, Abdul Wahid Ansari buys bags of gold-flecked dirt for his workshop, which is straight out of the Middle Ages except for the vats of Technicolor chemicals. Young men bend over 2,000-gallon water tanks, panning the dirt as coal fires roar in the unlighted room, emitting smoke through a hole in the roof.

The modern-day alchemist says he can tell at a glance how much gold a handful of dirt contains. The dirt is washed, mercury and nitric acid are added, and the mixture is “cooked” at a high temperature to separate the gold for melting back into bars or ingots.

“Our life is with the silver and gold,” he said through rotting teeth stained red from betel nut. “Let the copper be.”

I liked this part:

The dirt is most gold-laden during the peak October-to-February wedding season and just before the Hindu Diwali festival, when shops scrub their machines, walls and floors. At these times, dust prices can jump to $12 to $15 a bag, compared with $7 during monsoon season, when heavy runoff dilutes the mix.

And this part:

Gohel denies that she’s ever found a sizable nugget in the dirt, although the crew at Ambica Touch is skeptical.

“Of course they hit the jackpot sometimes,” said Paresh Soni, Nitesh’s brother. “When I lose a piece, do you think I’ll get it back? This is India.”

The story is here and for the pointer I thank Daniel Lippman.