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Hunting for gold undersea

As the price of gold and silver continue rising, expect more marine explorations in search for sunken treasures.

Published: 28-11-2012 00:00

Hunting for gold undersea

Not just children’s stories

It is a classic premise for an adventure story: hunting for hidden gold. While fictional characters who stumble their way onto treasures are often children like Tom Sawyer, real-life expeditions for sunken ships with troves of gold and silver are a very grown-up matter. Millions of dollars are spent for the chance to obtain something worth more than one’s investment.

Indeed, the prospect of finding gold is so enticing as to drive people to fund such expeditions. As gold has had an epic rise over the past decade, and with this trend likely continuing for some time, we can expect more treasure quests to acquire sufficient funding.

You may have heard of Odyssey Marine Exploration, whose endeavors include the 2003 salvaging of the Civil War-era SS Republic. More recently, it gained publicity after a lengthy, and ultimately losing, battle against the Spanish government for the right over treasures supposedly taken from an old Spanish vessel. In spite of such legal difficulties, Odyssey seems to have chalked it up to experience, and used this lesson to better thresh out agreements between any governments that may involve themselves in Odyssey’s business. It is safe to say interest in these ventures will remain strong, and Odyssey isn’t the only one to profit. Both professionals and amateurs are engaged in such expeditions.

Creating wealth?

This is not to say that an increase in gold and silver in circulation would add to an economy’s wealth, except to the degree that these commodities are used in industry — which is doubtful for artifacts. No, such discoveries would primarily benefit the people who find these treasures. Of course, those who do like hearing about these real-life adventures would benefit in the sense of enjoying a good story!

In 16th-century Spain, we have a historical example of the entry of gold and silver not enriching a country. Explorers brought these metals from the newly-discovered Americas, and Spain simply experienced a rise in prices. Because there was a larger quantity of money (this was when gold and silver were still officially designated as such), with no equivalent increase in goods, people simply bid prices up to match the quantity of goods.

As an aside, nowadays, with gold and silver generally considered as mere ‘commodities,’ and with increasing bills in circulation, we have bullion prices rising more than fivefold since the beginning of the 21st century.  It is actually the same principle at work.

But is it possible for today’s precious metals discoveries to have any significant downward effect on the price of gold and silver? No. At present, the amount of gold and silver in the world are already generally accounted for, and this is already reflected in the price in decentralized markets. Even discoveries of tons of gold undersea would not be in such a speedy rate as to depress prices. More importantly, due to the historical significance of these artifacts, the value of coins and whatnot found in ships would have a value many times above spot price of whatever metal is contained.

Conclusion

The idea of wealth left forgotten at the bottom of the ocean is a fascinating one. And although interest in gold and silver is growing, thus spurring the idea of seeking out treasures down below, any actual discoveries will have little effect on precious metals prices.