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African Blackwood – Ebony of the Ancients

African Blackwood - Ebony of the Ancients

I was browsing Etsy the other day when I chanced upon a marvelous vintage hardwood box from the 1980s.  The seller claimed that it was made from rosewood, a beautiful tropical wood that is highly desirable.  However, I was skeptical of that attribution.  The box simply didn't look like any rosewood that I had ever encountered before.

Instead, the wood's tight grain and deep chocolate brown color shimmered with the barest hint of purple.  In addition, a thin strip of pale white sapwood splashed across the front edge of the box, creating a striking contrast with the nearly black heartwood.

After hours of research, I finally came to a revelation about the identity of my mystery wood.  It was almost certainly African Blackwood, also known by its scientific name, Dalbergia melanoxylon, or locally in Africa as Mpingo.

African Blackwood is an exotic hardwood par excellence.  It is not only extremely rare, but also incredibly dark in color - often bordering on completely black.  Sometimes specimens are slightly lighter in color.  In these instances, the lustrous black grain is subtly streaked with rich browns and traces of violet iridescence.  The thin, yellowish-white sapwood is clearly demarcated from the dark heartwood - a visual characteristic that artistically-inclined woodworkers often exploit.

In addition to being stunningly attractive, African Blackwood also possesses amazing physical properties.

Foremost among these unique physical attributes is its incredibly high density.  Dalbergia melanoxylon has a specific gravity of 1.27, or 1,270 kg/m3, which is absurdly high for timber.  In fact, African Blackwood is the world's third densest commercially available wood, only surpassed by Itin (aka "super-mesquite") and Black Ironwood (the name is self-explanatory here).  All of these woods will readily sink in water (specific gravity 1.00), which is quite unusual - almost all species of wood float once seasoned.

Although little known outside of woodworking circles, there is a direct relationship between the density of a wood and its hardness.  The denser the wood, the harder it is.  As a result, African Blackwood possesses legendary hardness.  This is measured via the standardized Janka hardness scale, which quantifies the pounds of force necessary to embed a steel sphere measuring 0.444 inches in diameter halfway into a sample of wood.

African Blackwood scores a prodigious 3,670 lbf on the Janka hardness test, which puts supposedly hard woods like white oak (1,360 lbf) and rock maple (1,450 lbf) to shame.  Even exotic tropical hardwoods such as Zebrawood (1,830 lbf), Santos Mahogany (2,400 lbf) and Cocobolo (2,960 lbf) can't compare to the exceptional hardness of Dalbergia melanoxylon.

As a result of its extreme hardness, working with African Blackwood can be quite challenging.  If you are lucky, it will blunt your very expensive woodworking tools.  If you aren't lucky, it will snap your favorite carbide drill bit in two like a twig.  In fact, experienced woodworkers claim this difficult wood machines almost as if it was a metal.

This is both a blessing and a curse.

It is a curse for obvious reasons.  Only the very hardest and toughest blades and bits will make any headway against the recalcitrant wood.  And you should count on that hardware wearing at an accelerated rate.  Even screws and nails must be religiously pre-drilled to have any hope of penetrating African Blackwood.

But this exotic hardwood's famed hardness is an asset too, allowing it to hold any design detail marvelously well.  African Blackwood can even be machined to hold threads - an attribute that helps make it a wonder-wood for wind instruments (more on that later).

 

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African Blackwood originates from the arid plains of sub-Saharan Africa, where it grows from Sudan and Ethiopia in the north to South Africa in the south.  However, most commercial timber is harvested from two countries: Tanzania and Mozambique.

Dalbergia melanoxylon grows exceedingly slowly due to the harsh conditions of its native habitat.  Approximately 60 to 70 years must elapse before a Mpingo tree can seriously be considered for logging.  But the very best, darkest-colored wood only comes from much more mature trees that are at least 150 years old.

Despite its longevity, African Blackwood never grows particularly large or tall.  Most adult specimens average between 20 and 30 feet (6 and 9 meters) tall, with a diameter that rarely exceeds 1 foot (0.3 meters).  Exceptional examples can grow larger than these dimensions, but almost all of these old growth trees were harvested for their wood long ago.

African Blackwood is not an easy timber to wrestle from nature, even after a suitable specimen has been identified for logging.  The pith in the center of the trees is often infested by ants, which deposit sand and dirt throughout the trunk.  So in addition to being exceptionally hard, the trees are also riddled with silica and other equipment destroying abrasive minerals.  As a result, an estimated 90% of the wood is lost as waste in the long and difficult milling process.

One of the most intriguing aspects of African Blackwood is its historical origins.  For many thousands of years the glossy black timber has been intimately associated with ebony - that most desirable of dark woods.

This is particularly interesting because today ebony timber is considered to be exclusive to the Diospyros family of trees.  This includes Gaboon Ebony (Diospyros crassiflora), Macassar Ebony (Diospyros celebica), Vietnamese Ebony (Diospyros mun) and Ceylon Ebony (Diospyros ebenum).  In other words, the Diospyros family contains the "true" ebonies, while all other dark timber species are merely look-alikes.

There is only one potential exception to this iron-clad rule - African Blackwood.

You see, Dalbergia melanoxylon, while technically part of the rosewood genus of trees, is undoubtedly the "original" ebony of the ancient world.  It was the lustrous black timber that the ancient Egyptian pharaohs ardently coveted so many thousands of years ago.  They went to great lengths to obtain the precious material, which they used in fine furniture.  In fact, an intact African Blackwood bed was found in the tomb of that most famous of Egyptian rulers, Tutankhamun.

Trade caravans imported the treasured timber into Egypt from the southern part of the African continent, many hundreds of miles away.  It was often accompanied by other luxury goods from the same region, like gold, ivory, slaves and exotic animals.  The Egyptians called the prized wood "hbny", which has become our modern-day ebony - one of the few ancient Egyptian loan-words to be adopted directly into modern English.

African Blackwood is also mentioned in the Bible.  The Old Testament book of Ezekiel (27:15) states that: "The men of Rhodes traded with you, and many coastlands were your customers; they paid you with ivory tusks and ebony."  This was purportedly written by the prophet Ezekiel during his exile in Babylon between 593 and 571 BC, proving that Dalbergia melanoxylon was prized throughout the ancient world long before the modern-day ebonies of the Diopyros genus graduated to universal fame.

As an aside, it is obvious that the concept of "ebony and ivory" has been with us from the very dawn of human history.  This is no doubt due to the fact that they are both found in the same geographic area - the African savanna.  Ebony and ivory were the peanut butter and chocolate of ancient luxury materials.  Ivory's creamy off-white color contrasted beautifully with the glossy darkness of African Blackwood, making the pair a favorite of ancient royalty.

 

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Today, African Blackwood is used for a number of high-end items, including musical instruments, decorative inlays and turned objects.

Due to its high density and excellent dimensional stability, Dalbergia melanoxylon is a superb tonewood.  The world's very finest clarinets, oboes, flutes, bassoons, piccolos and bagpipes have traditionally been crafted from this rare and unique wood. According to the respected flute-maker Casey Burns, "African Blackwood, which makes an excellent flute, is now the standard by which all other flute tonewoods are judged."

Even some high-end guitars have been painstakingly hand-crafted from African Blackwood.  Unfortunately, due to the tree's small size it is exceedingly difficult to get material large enough to fabricate complete guitars from.  Instead, it is more common for guitar-makers to opportunistically add fingerboards, bridges and other small parts from this superlative acoustic wood.  It is a pity that African Blackwood guitars are so difficult to come by, as many experienced musicians and luthiers consider them to be the equal of that tonewood legend, Brazilian Rosewood.

Predictably, instrument grade Mpingo timber - nearly jet black wood from the very oldest trees - is in extraordinarily high demand.  Prices can range from $10,000 to $20,000 per cubic meter of instrument grade material, depending on the vagaries of the market.  This makes it one of the most expensive woods on the planet.

Because it is an excellent turning wood, costly objects d'art and small carvings are often sculpted from this most desirable of exotic woods.  Other items made from Dalbergia melanoxylon include custom knife and gun handles, smoking pipes, fountain pen bodies, duck calls and chess sets.  It is also coveted for marquetry and inlay in premium furniture.

Interestingly, African Blackwood is also frequently used as firewood in its native territories.  This might seem counterintuitive at first, but Mpingo trees are actually quite widespread across their indigenous range.  Furthermore, few trees are large enough to harvest for their timber and the wood is naturally imbued with a high oil content.  As a result, Dalbergia melanoxylon is an outstanding firewood species.  In fact, it has been said that fires fueled with Mpingo wood burn so hot that cooking utensils sometimes melt in them!

We are currently sitting at a unique historical junction regarding exotic hardwood timber.  This is particularly the case when examining supply-demand dynamics for African Blackwood.  The founder of Taylor Guitars, Bob Taylor, had this to say about its sister wood, ebony:

"Ebony has been a wood that for two or three or four hundred years we've gone into countries and we've used the ebony until it's all gone - literally.  Then we move into another country and we take their ebony until it's all gone."

 

 

Many of the sentiments that Bob Taylor conveys about ebony also apply to African Blackwood, albeit to a lesser extent.  While it is in no danger of extinction, commercially viable timber supplies are getting thin on the ground.

 

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For thousands of years the native African population was so small that any lumber harvesting was inherently sustainable.  Then an African population and infrastructure explosion during the 20th century granted us a relatively brief period of abundant exotic hardwood supply.  But this short-lived historical anomaly is rapidly coming to an close.

The consequences are predictable.  High quality African Blackwood lumber was readily available until the early 2000s.  But this abundance was illusory.  In reality, the old growth Mpingo trees were being systematically over-harvested in order to feed the insatiable demand for this most compelling of exotic woods.

The inevitable finally occurred on January 2, 2017.  That is when the entirety of the Dalbergia genus - including African Blackwood - was added to the CITES treaty (Appendix II) governing international trade in threatened species.  I've written about this topic previously in an article on Brazilian Rosewood, the most famous member of the Dalbergia family.

As a Cites Appendix II listed species, Dalbergia melanoxylon requires an export permit before it can cross international boundaries for commercial purposes.  Happily for professional musicians wanting to perform in a foreign country with an African Blackwood instrument, there is a non-commercial exemption up to 10 kilograms (22 pounds).  Additionally, any existing Dalbergia melanoxylon item or raw wood is grandfathered into the system, making it perfectly legal to own, buy or sell - provided it does not cross an international border.

African Blackwood is a unique and desirable wood in a world where few things feel truly original anymore.  Its seductively dark color tantalizes with whispers of chocolate and purple - an exotic hardwood without equal.  Is it really any surprise that the ebony of the ancients has captivated mankind since the time of the Egyptian pharaohs?

 

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Why Is Silver So Cheap? – A Historical Analysis

Why Is Silver So Cheap? - A Historical Analysis

Why is silver so cheap?  On an inflation-adjusted basis, the price of silver is comparable to the price of dirt right now.  It is a bizarre historical anomaly for a metal that has been treasured since the dawn of civilization.

The precious white metal's current price is a far cry from how valuable it used to be.

For example, during the 1st century AD in the Roman Empire, one day's skilled labor was equal to one silver denarius coin.  This was equivalent to about 3.9 grams (0.1254 troy ounces) of pure silver.

In late 14th century medieval England, a master carpenter earned one groat (4-pence) per day.  These coins weighed 4.66 grams of sterling silver, or 4.31 grams (0.1386 troy ounces) of fine silver.

A skilled construction worker in late 16th century Mughal India commanded a salary of 5.25 silver rupees a (lunar) month.  A Mughal rupee was a large coin containing 11.3 grams of nearly pure silver.  Assuming a 6 day work-week, this would translate into a daily wage of around 2.47 grams (0.0795 troy ounces) per diem.

Even as recently as the 1850s, a carpenter living in the United States would have only received a daily wage of somewhere around $1.50.  Because a silver dollar contained 24.06 grams of pure silver, this wage would have equaled 36.08 grams (1.1601 troy ounces) of fine silver per day.

Today we can conservatively expect a skilled worker to earn a minimum salary of $25 per hour, or $200 per day.  With silver currently bouncing around $16 a troy ounce, today's skilled laborer earns a wage of 388 grams - 12.5 troy ounces - of silver every day!

This naturally leads to a very basic question.  Why is silver so cheap right now?

Another way to measure the historical price of silver is via the gold-silver ratio.  This calculates the price of one troy ounce of gold in terms of ounces of silver.

From the dawn of human history until the mid 19th century, this ratio never rose above 20 to 1.  It fluctuated from a low of 2.5 to 1 at the dawn of the Egyptian Empire in 3100 BC to a high of 16 to 1 throughout much of the 19th century.  It was 12.5 to 1 during the time of Roman Emperors.  In early 19th century Japan under the Tokugawa Shogunate, the ratio was 5 to 1.

Today the gold-silver ratio stands at 82 to 1.

So once again I'll ask the question.  Why is silver so cheap?

If you look at how much silver is mined every year, the lunar-themed metal seems even rarer.  The global mine supply of silver has averaged 803.2 million troy ounces per annum over the past decade (2008 through 2017), while gold has averaged 89.4 million troy ounces over the same period.  This gives a gold-silver production ratio of about 9 to 1.

This doesn't make any sense.  Why is silver so cheap?

 

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From a historical perspective, the price of silver only really collapsed about 150 years ago, starting around 1870.  And then the white precious metal's situation went from bad to worse in the 20th century.  This culminated in silver's price washout in the 1990s to early 2000s, when you could buy as much of the stuff as you wanted for a mind-blowingly low $5 an ounce!  This was most likely a unique historical event.

Even though you can no longer buy silver for $5 an ounce, it is still tremendously undervalued today.  In order to understand why silver is as cheap as dirt, we have to look back at a few key events in world history.

The first of these was demonetization - the discontinuance of silver as an official form of money.

Until the 1860s, many nations around the world were on silver standards or bimetallic gold-silver standards.  This manifested itself through the free coinage of silver, meaning that you could take unlimited quantities of silver bullion to your national mint and have it turned into legal tender silver coins (for a fee, of course).  So your silver bullion was, quite literally, money!

But the coup de grâce for the global silver standard came, rather unexpectedly, from the aftermath of the Franco-Prussian War.  Once the Prussian Army had crushed the French at the battle of Sedan in 1870, the victorious Germans demanded an indemnity of 5 billion gold francs from the defeated nation.  The French had no choice but to pay the exorbitant bribe, even though it amounted to a staggering 1,451 metric tonnes of gold.  As a point of reference, this is more gold than is currently held in the entire Swiss national gold reserves.

Prussia opportunistically used this golden windfall to switch its currency from the silver-backed German Thaler to the gold-backed German Mark.  However, because the major economic powers of Great Britain and France were already on gold standards, this Prussian monetary reform had an unintended side effect.

It fatally undermined the acceptability of all remaining silver-backed currencies in international trade, causing a domino effect.  As the price of silver fell throughout the 1870s, more countries (including the U.S.) were forced to switch to gold-backed currencies as silver-backed currencies collapsed in foreign exchange value.

At the same time, halfway around the world in the United States major silver mining discoveries were taking place.  The first of these was the famous Comstock Lode, located in Virginia City, Nevada.  This deposit produced massive quantities of silver from 1860 until the mid 1880s.

As the Comstock Lode's production began to taper in the late 1870s, Leadville, Colorado replaced it as the United State's premier silver boom town.  Mining there continued uninterrupted until the early 1890s.

Silver was also discovered in the Coeur d'Alene region of Idaho in the mid 1880s.  This area eventually became one of the most prolific silver deposits in the world, yielding more than a billion troy ounces of the precious metal to date. Silver is still mined in the Coeur d'Alene region today, over 130 years after its first commercial production.

These sizable silver discoveries ensured that prodigious supplies of the precious white metal flooded the global market for decade after decade, helping to drive its price down.

 

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Another little-recognized factor that crippled silver prices was the commercial deployment of electrolytic refining in the late 19th and early 20th century.  Until that time, metal refining was a very imperfect process.  Copper, zinc, lead and other base metal ores often contained trace amounts of silver that couldn't be profitably extracted using older, less efficient refining methods.

But at the dawn of the 20th century, electrolytic refining suddenly turned the metal mining industry on its head.  This new refining process used electricity to decompose a mixed-metal anode bar in an electrolyte solution and then reconstitute a pure, single-metal bar at the cathode.  This is an extremely efficient refining method that allowed for the recovery of effectively all trace metal impurities.

And while the percentage of silver contained in most base-metal ores is very small, the quantities involved become massive in aggregate.  The widespread adoption of electrolytic refining allowed the small quantities of silver that had previously been "locked-up" in base metals to be freed.

This was especially important because metals are generally recycled over time.  So as all the lead, copper, tin and zinc accumulated since Roman times was gradually recycled  over the course of many decades via electrolytic refining, a considerable amount of additional silver was recovered.  This extra supply largely hit the market in the early to mid 20th century.

In addition, the secondary production of silver extracted via electrolytic refining is price insensitive.  If you are a copper miner, you care primarily about the price of copper.  Any silver you get from the refining process is considered a by-product metal that you will sell into the spot market regardless of how low the price of silver might be at the time.

The next major event in the silver price timeline took place during the 1960s.  Although the white metal had been largely demonetized in the late 19th century, most countries still used silver for token coinage.  But when silver prices started to rise in the 1960s due to widespread inflation, all countries on earth quickly removed any remaining silver from their circulating coinage.  This process was largely complete by the early 1970s, resulting in silver being completely demonetized for the first time in human history.

The final insult came when national governments began to slowly dispose of their leftover silver stockpiles.  For example, the last of the U.S. Government's strategic silver stockpile was sold off to the U.S. Treasury for the minting of U.S. Silver Eagle bullion coins in 2002.

Other nations enthusiastically followed suit.  Foreign governments and central banks were significant net sellers of silver from the 1980s until around 2010.  However, there have been almost no government sales of silver bullion stockpiles since that time.

At this point, I think it is fairly safe to assume that governments have no substantial silver reserves left.  This is in stark contrast to gold, which is still widely held as an important reserve asset by nearly all central banks around the globe.

So now we know why the price of silver has been so undervalued for the last 150 years.  But will it stay cheap forever?  Well, let's examine the evidence.

Silver has already been completely demonetized.  So it is effectively impossible for its monetary demand to drop any lower.  Furthermore, there are no longer any meaningful government stockpiles of the metal (unlike with gold), so that potential supply overhang is gone.  No government can credibly pledge to sell physical silver in large enough quantities to suppress its price for long.

More or less all base metal ores are subject to electrolytic refining these days.  This means that there is more silver produced as a by-product of base metal mining than from primary silver mines.  But in spite of this fact, the gold-silver mining ratio is still only 9 to 1.  So the extra silver supply certainly doesn't seem to adversely impact its rarity very much.

In addition, mining companies have been having an increasingly difficult time finding large, rich ore deposits, regardless of whether they are looking for base metals or precious metals.  Humanity has effectively high-graded the planet for several centuries now, always mining the richest ore bodies from the easiest to access locations.

All that is left are low-grade, geologically-complex ore bodies located in remote, politically unstable regions.  The idea that we will magically stumble across another Comstock Lode or Coeur d'Alene bonanza chock full of high-grade silver ore borders on the ludicrous.

 

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My analysis is pretty straightforward.  Silver is insanely undervalued at any price below $20 an ounce.  The current gold-silver ratio of 82 to 1 is egregiously high and represents little downside risk for silver investors.

The upside is that silver might one day revert to its traditional value.  If one day's skilled wage was to once again become equal to a single troy ounce of silver, it would imply a silver price of at least $200 per ounce.  Anything even close to this result would enrich silver stackers beyond their wildest dreams.

However, I feel it is important to note that I don't think the price of silver will skyrocket while the global securities market bubble is still in play.  As a bedrock tangible asset, silver is the antithesis of the paper asset casino that currently dominates the marketplace.

In other words, silver will only rise dramatically in price if it is either partially or completely remonetized.  And remonetization will only be possible once our grotesque paper asset bubble has definitively (and messily) popped.

So I've got good news and bad news for you.  The good news is that I think you have a little more time to get in on this stunningly undervalued monetary metal.  The bad news is that one day when we least expect it, this marvelous bargain will be gone.

 

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Gold Versus Bitcoin as a Store of Energy

Gold Versus Bitcoin as a Store of Energy

Gold mining consumes a massive amount of energy.  So does Bitcoin mining, for that matter.  But rather than being a drawback, I see the high energy consumption of these alternative currencies as an overlooked benefit.

After all, a currency that can't be arbitrarily created at the whim of 12 corrupt central bankers sitting in an oak-paneled conference room somewhere in the bowels of Washington D.C. is a bonus in my book.  If we had been using either a gold-backed currency or Bitcoin when the 2008 financial crisis struck, it would have been impossible for the Federal Reserve to unilaterally bail out Goldman Sachs, Citigroup and all the other too big to fail banks against the will of the American people.

The fact that real energy and resources have to be expended to acquire new supplies of either gold or Bitcoin is one of the very compelling features that both of these currencies share in common.  In fact, I would argue that is a vital attribute for any successful currency - it must represent a store of energy.

If we compare gold versus Bitcoin from a store of energy perspective, does one have a higher energy density than the other?  And if so, by how much?

Let's examine the energy density of gold first.

Because it is impossible to get good information on aggregate energy usage in the gold mining industry, I'm going to use a single major gold producer, Goldcorp, as a proxy for industry-wide energy consumption.  Goldcorp, a Canadian-based miner, is one of the world's largest gold producers, with a 2017 production total of 2.57 million troy ounces.

According to its February 2018 corporate presentation, Goldcorp attributes 14% of its production costs to either fuel (generally diesel or fuel oil) or power (mostly electricity).  But Goldcorp also has other energy intensive costs that fall outside of this narrow definition of energy.

For example, tires (2%), explosives (3%), site costs (5%), maintenance parts (9%) and consumables (15%) are all energy sinks.

The massive tires used on mining vehicles are composed almost entirely of oil derivatives.  A tire for the massive Caterpillar 797B dump truck weighs 11,860 pounds (5,380 kilos) and contains almost 2,000 pounds (907 kilos) of steel, which is itself a very energy intensive metal to mine and refine.  It is estimated that each one of these mammoth tires consumes 100 barrels of oil to fabricate.

Explosives are another energy cost in disguise.  Although it is generally accounted for as a material on a mining company's ledger, explosives are actually highly concentrated chemical energy.

Two of the most commonly used explosives in mining today are ANFO and TNT.  ANFO is composed of 94% ammonium nitrate and 6% fuel oil (another hidden energy expenditure).  Ammonium nitrate, in turn, is created by reacting gaseous ammonia with nitric acid.  However, ammonia is not found free in nature and must instead be synthesized via the Haber process.

The Haber process is extremely energy intensive because it requires high pressures (between 150 and 250 atmospheres) and temperatures (750 to 930 °F or 400 to 500 °C) in order to work.  In fact, it is estimated that ammonia synthesis via the Haber process devours more than 1% of total global energy output.

TNT, or trinitrotoluene, is hardly less energy intensive.  The base chemical used to create TNT is toluene, a light hydrocarbon fractionate.  Although it occurs naturally in crude oil in limited quantities, most toluene is a byproduct of gasoline production via either hydrocarbon cracking or catalytic reforming.

Gold mining site costs are another secret energy cost center.  While these can vary widely from mine to mine, they include exploration drilling, mine ventilation, waste water disposal, waste rock removal and site reclamation.   These activities consume large quantities of energy, only a portion of which are accounted for in raw electricity and fuel costs.

All of the equipment and replacement parts used to keep a gold mine running smoothly also cost a great deal in energy terms.  Parts and machinery must be fabricated in a factory and then transported to the mine site, which is often geographically remote.  Even common raw materials used in gold mining, like lime and sodium-cyanide, require tremendous amounts of energy to synthesize or extract.

And, of course, we can't ignore the fuel costs attributable to commuting mine workers and contractors, which only show up as an indirect, payroll cost.

 

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Overall, it wouldn't be an exaggeration to guess that anywhere from 1/4 to 1/3 of the cost of gold extraction is directly attributable to energy, either in the form of electricity or fossil fuels.

According to an estimate by industry consultant CPM Group in its 2018 Gold Yearbook, the All-In-Sustaining-Cost (AISC) to mine an ounce of gold averaged $949 across the entire gold mining industry in Q3 of 2017.

This means that there is between $237 and $316 worth of energy embedded in every ounce of gold pulled from the ground.  With WTI crude currently trading at $51 a barrel and using the midpoint of the above energy consumption estimate, there is the equivalent of just over 5.4 barrels of oil used in the extraction of each ounce of gold.  That is equivalent to 31.6 gigajoules (GJs) of energy per ounce!

We can calculate gold's electrical energy equivalence at around 8,800 KHW per troy ounce.  This represents about 10 months' worth of electrical usage for the average American household.

So gold represents an excellent store of energy, being incredibly energy dense.  But how does the energy consumption of crypto-currencies compare?  Is Bitcoin far behind?

For Bitcoin's energy usage estimates, I'm going to rely heavily on the work of Alex de Vries, who is widely regarded as the world's leading authority on Bitcoin energy consumption, as well as being a prominent blockchain expert.

According to Mr. Vries latest estimates, Bitcoin's blockchain calculations consume about 67 terawatt-hours (TWH) annually, which is about the same amount of electricity that the South American country of Chile uses in a year.  As of 2018, the average time between each successfully mined Bitcoin block is about 9 and 1/3 minutes.  And each of these new blocks rewards miners with 12.5 new Bitcoins.

So we can extrapolate that somewhere around 704,000 new Bitcoins are created every year via mining.

This means that each freshly mined Bitcoin represents just over 95,000 KWH of electrical energy.  This is equivalent to about 110 months of electrical usage for the average American household.

Although not directly comparable because Bitcoin is mined using electricity and not oil, each unit of the premier crypto-currency is equivalent to over 58 barrels of oil.  This represents 342 GJ of energy per Bitcoin.


But what about the energy density of gold versus Bitcoin on a dollar for dollar basis?

With Bitcoin currently trading at $3,500, each dollar's worth of Bitcoin stores about 27.1 KWH of energy.  With gold going for around $1,240 a troy ounce, every dollar of the precious metal symbolizes around 7.1 KWH.

An energy assessment of gold versus Bitcoin from an oil perspective gives us similar values.  Each dollar of Bitcoin equals 0.0167 barrels of oil, while every dollar of gold is 0.0033 barrels of oil.

So Bitcoin has a clear advantage in energy density versus gold, with a ratio of 3.8 to 1 in Bitcoin's favor.

Of course, it is wise to keep in mind that this energy density ratio is somewhat arbitrary.  It will fluctuate markedly with changes in the relative market value of gold versus Bitcoin.  In fact, as the price of Bitcoin has dropped over the past several months, the preeminent crypto-currency has become more "energy rich" on a per dollar basis relative to gold.

Another factor to keep in mind is that both Bitcoin and gold are only energy storage vehicles in a very abstract way.  It is not possible to pull electricity or oil back out of either of these alternative currencies once it has been consumed in their production.

Instead, both gold and Bitcoin provide their users with very different sets of energy-derived benefits.  Gold is a physical commodity that possesses excellent corrosion resistance, malleability and ductility, as well as superb electrical and thermal conductivity.  Some people bizarrely conclude that this means the yellow metal has no intrinsic value.  I strongly disagree, as I argued in a recent article I wrote on the intrinsic value of gold and gemstones.

On the other hand, Bitcoin provides its users with a fully digital currency secured by an incorruptible, publicly-verifiable blockchain.

Personally, I feel that gold has the edge here, although you might reasonably reach a different conclusion.  Bitcoin's blockchain technology is certainly innovative and definitely has value, but this value is completely self-referential.

For example, do we really need to know how much someone's Starbucks latte cost 5 years ago?  As it is currently structured, Bitcoin will retain this (and other equally superfluous) transactional data in perpetuity.

I believe that earth's scarce energy resources could be better utilized.  For instance, the electrical energy consumed in crypto-currency calculations could instead be used to tackle computationally-intensive math problems that would broadly benefit humanity.  For those who are interested, this is a topic I addressed in greater detail in an article titled "Blockchain 3.0 and the Problem with Bitcoin".

 

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Brazilian Rosewood – The Extinction of a Legend

Brazilian Rosewood - The Extinction of a Legend
Photo Credit (CC 2.0 license): Ian Burt

Among the pantheon of renowned hardwoods, few have been as desired, loved and craved as Brazilian rosewood.  This eye-catching tropical hardwood has been used for fine cabinetwork, exquisite furniture and celebrated musical instruments for hundreds of years.  And yet, it is almost a ghost today; the precious wood has been so coveted that it has been nearly logged to extinction.

Brazilian rosewood (scientific name: Dalbergia nigra) goes by a number of trade names, including Bahia rosewood, Rio rosewood, Pianowood and Jacaranda.  But regardless of what it's called in the woodworking industry, this illustrious timber is always immensely beautiful.

The highly-figured timber has a rich, deep chocolate color with reddish or even purplish overtones.  Its distinctive, black-marbled grain pattern can give it a striking, almost variegated, appearance under certain circumstances.  When worked, Brazilian rosewood, like all true rosewoods, gives off the unmistakable scent of roses - hence its name.

As if its tremendous beauty was not enough, Brazilian rosewood has also been endowed with superb physical characteristics.  The wood has considerably greater hardness and crushing strength than either white oak or rock maple - two temperate hardwoods famed for their strength and toughness.  Rosewood is also remarkably dense, with a specific gravity of 0.84 - just less than that of water.

But Brazilian rosewood's most outstanding attribute is undoubtedly its legendary acoustic qualities.  This highly resonant wood sports rich, warm tones with unparalleled sustain and clarity.  In fact, many musical professionals consider it the finest tonewood in existence.

As a result, the world's most famous instrument makers have naturally gravitated towards this most perfect of woods.  Classic guitars such as the Martin Dreadnought, Fender Stratocaster and Gibson Les Paul were all produced from Brazilian rosewood, as were some of the finest Steinway pianos.

 

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Brazilian rosewood is native to the Atlantic coastal rainforests of Brazil.  And while it does grow in other parts of South America, the eastern Brazilian states of Rio de Janeiro, Minas Gerais, Espirito Santo, Sao Paulo and Bahia are its preferred environment.  This is where it grows most abundantly and robustly, reaching heights of well over 100 feet (30 meters) with trunk diameters of more than 3 feet (1 meter).  Unfortunately, relentless logging by the timber industry decade after decade has inexorably whittled down its population.

But we can't lay the blame for the loss of this stately tree exclusively at the feet of conventional loggers.  In addition to its obvious use as a fine cabinetwood, Brazilian rosewood has also been harvested and processed for its essential oils, which were indispensable to the perfume trade.  In fact, when the world's first designer fragrance, Chanel No5, was launched in 1921, it used Brazilian rosewood oil as one of its primary ingredients.

Loss of habitat has also plagued the ill-fated wonder tree.  Over the course of the 20th century, the rapid growth of the Brazilian megalopolises of Rio de Janeiro, Sao Paulo and Salvador permanently eliminated much of the coastal rainforest ecosystem it had occupied.  Further inland, slash and burn farming, coupled with industrial-scale cattle ranching, fragmented the rainforest habitat that the tree so loved.  As a result, few of the magnificent rosewood trees that once towered over the Brazilian countryside remain today.

 

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By the 1950s, timber from Brazilian rosewood was becoming increasingly difficult to source in the commercial quantities required by fine furniture and instrument makers.  By the time the 1960s arrived, the supply situation had become critical.  Most U.S. guitar manufacturers stopped using the tropical hardwood in the late 1960s.  U.S. and European furniture makers quickly followed suit as rosewood timber stockpiles collapsed.  Consequently, vintage Brazilian rosewood guitars and furniture are highly desirable today.

Finally, in 1992 Brazilian rosewood was belatedly added to the CITES international treaty on endangered plants and animals.  Dalbergia nigra is registered in Appendix I of CITES, which lists the most critically endangered species.  Consequently, the wood is subjected to extremely strict international trade controls.  This makes exporting Brazilian rosewood across international borders in any form, finished or raw, effectively illegal without an export permit or re-export certificate.

In many ways, Brazilian rosewood is the spiritual twin of that doomed, but marvelous Caribbean hardwood - Cuban mahogany.  They are both tropical hardwoods with exceptional beauty and physical properties that were driven to near extinction by overzealous loggers, craftsmen and consumers.

However, Brazilian rosewood is not the only rosewood species available to woodworkers.  East Indian rosewood (Dalbergia latifolia), Honduran rosewood (Dalbergia stevensonii), Cocobolo (Dalbergia retusa) and Amazon rosewood (Dalbergia spruceana) are all commercially available woods belonging to the rosewood genus - true rosewoods.  These true rosewoods share very similar tonal and physical characteristics to Brazilian rosewood and are often used as substitutes for the now unobtainable ideal.

 

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Predictably, after the supply of Brazilian rosewood timber dwindled in the late 1960s, these surrogate rosewood species experienced exceedingly high demand.  Consequently, on January 2, 2017 all rosewood species (other than Dalbergia nigra, which had been added to Appendix I in 1992) were added to Appendix II of the CITES treaty.  Appendix II is less restrictive than Appendix I, but still prevents most international trade in the raw timber of a listed species.

Luckily, any rosewood already inside a country, regardless of whether it is timber or finished product, is perfectly legal to buy, sell and own, provided it is does not cross national borders.  Because East Indian rosewood, Honduran rosewood, Amazon rosewood and Cocobolo were just recently subject to the CITES treaty, there are still considerable stockpiles of these desirable woods available for high end woodworkers.  If you ever wanted a fine rosewood instrument, sculpture or other objet d'art, now is the time to act, before these rare woods disappear forever.

 

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