Worldwide demand for buying gold bullion has gone through the roof in early 2009, but at what human and environmental cost to emerging producers in Southeast Asia?

With a massive surge in the gold spot price since November of 2008, both small and large producers of gold have ramped up production. This includes not just coins and bars for investors buying gold bullion but also, of the ore itself. However, before investors in the Western world consider buying bullion bars from Indonesia or Thailand, they will want to consider the ultimate cost of their investment.

In North America, for instance, people have become accustomed to at least a certain amount of protection under environmental law. However, ruling military dictatorships and a thieving power elite in countries such as Cambodia (as profiled in a recent UN report) are causing severe environmental and human suffering.

Consider the use of mercury by miners without any protective gear and no concern for where it collects when used. Both miners and their families routinely suffer the effects of mercury poisoning, just as thousands of US miners suffered “black lung” when working coal mines in the early- to mid-20th century.

These are exactly the sort of human-right protections that collective bargaining and democratic processes lead to. When one chooses to invest in gold bullion with products produced in these countries, that money is used to prop-up such governments. Purchasing power is political power, as was the case with the South African Krugerrand in the 1980s, when their importation was banned due to the activities of the Apartheid government.

Some countries ruled by despotic leaders are willing to do anything for “hard” currency, including selling off the entire gold reserves of a nation over the course of a decade or two and selling it off as gold bullion investments.

While the countries of Southeast Asia are relative newcomers to the large-scale mining operations that these tiny and populous countries have exploded with mining activity, many of these nations have a long history of recovering tiny bits of gold for domestic use. There are many ancient treasures of the region made of gold or plated with gold. Bars and coins are a more recent innovation, due to rising stockpiles.

Countries that degrade the natural environmental are being more than un-ethical. Since the Earth is essentially a closed system as far as “things” and gases go, those pollutants eventually reach the waters of the world and the shores of North America. Buying gold bullion from countries that allow such abuses to continue is a poor investment in your personal health and safety.

Indonesia, has been a rising major producer of gold since the early 1990s, when slag-mining was first introduced. This process, banned in several US states after tailings were found in 40% of the Western watershed in the late 1990s. Cyanide leaching into the local water table acidifies water, kills fish and contaminates water supplies.

Because the amount of potential investment is so large in a time of rising gold prices, extra care should be taken to focus buying gold bullion that is produced in a responsible manner.

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Janet Jones

March 19, 2009