High gold prices are increasingly portrayed as an obstacle to more responsible mining. 

But the high price of gold is not the problem; it is a spotlight that reveals where the system was already failing. This is especially evident now, when gold has surpassed USD 5,000 per ounce, reaching a historic record in January 2026. 

The usual argument is simple: 
price rises → greed increases → illegality grows. 

Labor economics and recent evidence from Madre de Dios, Peru, offer a different way to look at this. 

An upcoming report (coming soon) on the gold supply chain shows that the main bottlenecks are not moral attitudes or the price of mercury, but rather labor institutions and marketing constraints. In artisanal mining, in Madre de Dios, workers typically receive a fixed share of production (around 25%), labor costs represent a significant fraction of total costs, and hiring follows informal but stable rules. Mercury, by comparison, is cheap. 

When the price of gold rises, mining becomes more attractive (relative to other jobs) and more people enter the sector. However, formal (and in some cases certified) mining cannot grow quickly: access is limited, selling with invoices reduces net income and delays payments, and not all production can be placed in certified markets. Illegal and informal mining grow because, in practice, it is the only segment capable of absorbing this increase in labor demand. 

Seen this way, high prices do not prevent responsible practices.
They reveal frictions: 

• Social norms for profit sharing within concessions, where workers often receive a fixed proportion of production. These unwritten rules structure everyday incentives and mean that the benefits of technological or institutional changes are not always distributed equitably. 

• Differences in incentives between workers and concession holders over who bears the costs of change, since formalization or the adoption of more responsible practices often involves more effort, learning, or risk for some, while the potential benefits accrue to others. 

• Liquidity and marketing constraints under formality, because selling gold formally usually involves slower payments, fewer buyers, and greater administrative requirements, which reduces short-term available income—especially for those who depend on daily cash flow. 

If we diagnose the problem as greed, the response is greater control and punishment. 
If we understand it as a challenge of the labor market and productive organization, the response is different: expanding legal access, reducing marketing bottlenecks, and designing transitions in which workers credibly share in the benefits—especially during price booms. 

Responsible mining does not fail because the price of gold is high. 
It struggles when institutions adjust more slowly than markets. 

We have seen that high gold prices do not generate irresponsibility by themselves, but rather reveal pre-existing frictions in labor markets and in the organization of artisanal mining. 

What happens when premiums or differentiated prices for certified gold exist, but the capacity to scale responsible mining is limited? At first glance, those premiums should tilt the balance toward formalization. In practice, it is not so simple. 

When the price of gold rises, expected profitability increases across the entire sector. However, the capacity of formal and certified mining functions like a funnel: access is restricted, paperwork and invoicing generate costs, payments take longer, and training or equipment require time. That capacity cannot expand at the same pace as demand. 

For workers who usually receive a fixed share of production and depend on daily income, what matters is not the price “on average,” but whether the premium* that difference in price is called the premium translates into higher, more stable, and timely income. 

This is where premiums interact with the frictions already described. 
Social norms for profit sharing within concessions mean that the benefits of the premium do not always reach those who bear the additional effort. Differences in incentives between workers and concession holders make agreements difficult when the costs of change are immediate but the benefits are uncertain or arrive later. And liquidity and marketing constraints under formality further reduce the appeal of transition. 

The result is a paradox: 
while certified mining grows slowly and with limited capacity, the informal and illegal segments—more flexible and without those constraints—rapidly absorb the increase in labor demand. The effect is not convergence, but a widening gap between those who can access the premium and those who are left out. 

This does not imply that premiums are irrelevant. It implies that premiums alone do not compete with labor markets that adjust quickly. 

The lesson is clear: 
premiums work best when they are accompanied by labor-market design—clear sharing mechanisms, timely payments, and credible transitions for workers and concession holders—especially during price booms, when these frictions become more visible. 

This is a personal piece by Dr. Fernando Javier Fernández, Senior Research Scientist at the Wyss Academy for Nature. 

*Premium: A premium is the price difference between what you pay for certified gold versus non-certified gold. It is the same for the case of bananas: The premium would be the difference of price between a fair-trade banana versus a regular banana.