Meanwhile, on the other side of the world, another gold drama was unfolding. On a remote island off Papua New Guinea, the biggest mining company in the world was struggling to salvage its interest in a huge gold deposit. Its problems were in their own way more sophisticated than those of the traders: they involved religious rituals, cargo cults and tribes of people who would know just what to do with a New York speculator.
Lihir Island and RTZ had seemed made for each other. The island contains the world's largest undeveloped gold reserves, worth about pounds 5bn at today's prices, which RTZ, the world's biggest mining company, had been quietly and confidently preparing for production.
Now there are grave doubts whether RTZ will go ahead after a bizarre series of events that say much about the problems of business in one of the least developed regions of the world.
Early this month RTZ said it wanted to bring in a third partner - Venezuela Goldfields of Canada - to join itself and Niugini Mining, part of Battle Mountain Gold of Texas. Paias Wingti, PNG's Prime Minister, was furious, saying this broke previous agreements. He declared PNG would take a 50 per cent stake in the Lihir project and attacked 'the decisions of foreign companies which are taken in flagrant violation of my government's decision'.
There are several sub-texts to all this, which inevitably lead to the same conclusion of a mounting crisis of confidence in PNG among international investors. In some respects, the instability is understandable given the country's headlong rush into the 20th century and its problems in coping with the realisation that it contains some of the world's most dazzling mineral resources.
The 7,000 Lihirian islanders were largely unknown to the outside world before a geologist arriving by boat in 1982 touched on what later proved to be this century's biggest gold discovery outside South Africa. RTZ acquired the stake when it took over BP Minerals in 1989, and has since been seeking equity partners to reduce its exposure to an investment that involves financial and political risks. About dollars 125m has been spent on the island so far, with further construction costs estimated at dollars 600m.
Much of the preparation has involved developing agreements with the landowners, for whom life has changed irrevocably since the first mining helicopter landed 10 years ago. Smack in the middle of the proposed mine is a sacred site, a rock known as the Ilaia, or the place where many believe their souls enter the next world. To mine the volcanic rock would involve crushing the Ilaia, so compensation agreements will have to be worked out. This may prove delicate on an island where some follow cargo cults revolving around such diverse figures as Jesus Christ and the late President Lyndon Johnson.
The Lihir Landowners Association is led by Mark Soipang, a 43- year-old former engineering student, who says wryly that RTZ has begun to understand the islanders' ways. 'Give them time, and they will even learn to think like us. If not, they might chew some betel nut until they do.'
Lihir is just one of the mining projects where giant corporations have been thwarted by determined locals. The biggest is on the nearby island of Bougainville, where one of the world's biggest open-pit copper mines, which once provided almost half PNG's exports, has been shut since 1989 after an armed revolution by local landowners. The mine's operator, Conzinc Rio Tinto of Australia (CRA), an affiliate of RTZ, has virtually abandoned the island and written off millions.
Bougainville was a textbook case of a Western mining company failing to come to terms with landowner grievances that had been simmering since before PNG's independence from Australia in 1975. Recent attempts elsewhere to avoid a Bougainville-style clash of cultures have not been entirely successful. Earlier this year, CRA announced it was pulling out of the Mount Kare alluvial gold mine operation in the highlands of the PNG mainland. The Mount Kare gold was discovered only in 1987, and was quickly followed by a Klondike-style gold rush from highland tribes. Since 1990, rival landowners have attacked CRA's mine three times, on one occasion forcing the manager at gunpoint to set fire to a helicopter and buildings.