Investors are hoarding it to hedge against the dollar’s weakness. Consumers are buying it up in ever increasing volumes. Gold seemingly adds up to big opportunities wherever you look, with US gold jewelry sales representing a growing $17 billion market and China gold jewelry sales reaching nearly 260 billion yuan in 2009. But the fact is that this precious metal has a dark side, too. As gold’s prestige and value increases, so do the implications of the trade itself.

“Most consumers don't know where the gold in their products comes from, or how it is mined,” says NoDirtyGold.org, a group that encourages retailers to cease carrying gold that comes from illegal sources.  “Gold mining is a dirty industry: it can displace communities, contaminate drinking water, hurt workers, and destroy pristine environments.” 

Dirty gold is no marginal issue. According to a recent 60 Minutes report, dirty gold mining is rather pervasive, and is also responsible for “the deadliest war since WWII.” Five million people have reportedly died in the Democratic Republic of Congo in a war primarily funded by gold mined in the country by warlords, and then smuggled out to be sold in retail stores around the world. Could that bracelet you just bought at Wal-Mart have come from illegal gold originated in Congo? According to 60 Minute’s findings, it is a vague possibility.

As part of an in-depth investigative research process, 60 Minutes talked to some of the Nation’s premier gold retailers in order to determine which companies could trace their gold back to a particular mine. One retailer, Tiffany & Co., said it could trace nearly all of its gold back to a particular mine in Utah. On the other hand, Wal-Mart, the nation’s largest purveyor of gold, was far less certain about the origin of its products. The company said it plans to trace the source of 10 percent of its gold products by 2010. But given the scope of the tragedy in Congo, critics say Wal-Mart’s plan leaves much to be desired.

“Wal-Mart has moved so dramatically and impressively on its sustainability initiatives, that it’s surprising, and disappointing, to see them moving so tentatively on dirty gold,” says Gil Friend, author of The Truth About Green Business and CEO of sustainability consulting firm Natural Logic. “Their goal is too low, and their pace is too slow.”

As Friend and 60 Minutes point out, if Wal-Mart were to demand traceability all the way back to the mine on all the gold that it sells, it could have tremendous commercial implications for the industry – not to mention help put an end to a tragic war. In appreciation of this fact, Wal-Mart just signed on to support NoDirtyGold’s “Golden Rules” of gold mining, along with retailers Kmart, JCPenny, Blue Nile, Van Cleef & Arpels and many others. 

Grassroots campaign support is at least an optimistic sign. It represents a first step toward ethical gold sourcing and sends a message to the market that will hopefully help to kick off a process of purging illegal gold from the global supply chain. But as gold industry insiders point out, in order to successfully shift to a socially just and truly sustainable industry “gold standard,” there is still quite a distance to travel and also, systemic issues to explore. For instance, to what extent are communities around the world affected by gold mining? And what about the industry’s overall ecological footprint?

“Customers need to understand that the environmental impact of gold mining in our own country is quite devastating, even though the US is a developed country with strong environmental policies,” says Meghan Connolly Haupt, founder of San Franciso-based sustainable fine jewelry company C5. “The largest mine on earth is actually in Utah and measures 2.5 miles wide and one mile deep. It is visible from outer space. This is an important piece of information for consumers because it helps shatter the perception that the issues associated with mining are exclusive to developing countries.” 

Haupt explains that no matter where it occurs, gold mining is associated with the destruction of habitats and volumes of waste. One gold ring results in more than 30 tons of mine waste, she says. And that’s a quantity that continues to go almost completely unchecked. Where are the industry standards and safeguards?

“The industry as a whole has operated in almost the same way for many decades with little regard for the environmental and social impact,” says Haupt. “Lack of customer demand is often quoted as the reason the industry has been slow to change. But mining is a global industry and there are no universally accepted standards or industry certifications at this time. Those companies with the resources to devote to promoting change are often those that are the most stifled by existing operations.”

Perhaps that’s why large retailers lag behind pure-play, sustainable jewelers like C5 in terms of sustainable performance. In C5’s case, the supply chain is miniscule by comparison, so clearly there is a built-in advantage. Innovative, sensible and sensitive methodologies are a lot easier to implement and achieve.

Haupt crafts jewelry made with either recycled or fair-trade metal, using processes with minimal social and environmental impact. As her company reminds consumers, every piece of jewelry purchased from C5 versus a mainstream jeweler is one less that contributes to pollution, destruction of habitats, forced labor, displacement of communities and other negative impacts.

“I started C5 company to help create a systemic change in the jewelry sector,” says Haupt. “By leading the sustainable jewelry movement, we are helping to raise the standard of business, which translates into positive economic development in some of the world’s most impoverished countries.”

C5 is just now launching its first two collections of finished jewelry, and according to Haupt the company will be expanding those lines in 2010. Though as a start-up C5’s financial future is somewhat uncertain, its value proposition is abundantly clear. Talk about your statement pieces.