A GRAND FOR GOLD
by Megan Barnett, Jan 25 2008
Forget about $100 oil. Try $1,000 gold.A national emergency in South Africa has driven the price of an ounce of gold to another new high, and there are no signs of its momentum slowing. It rose to $921.30 in London trading, surpassing the $914 record set earlier this month.
South Africa, the world's second-largest gold producer after China, shut down its mining operations today as the country faces acute power outages. The state-owned power company Eskom ordered all mines to evacuate underground workers and cease mining activity in order to save power.
The South African government called the situation a national emergency, and it has threatened to ration electricity, the Guardian reports. Eskom said that the mine closures could last up to six weeks. It also warned that blackouts would continue for years until more power stations are built or another solution is found.
"The unprecedented, unplanned power outages must now be treated as a national electricity emergency situation that has to be addressed with urgent, vigorous, and coordinated actions," said Alec Erwin, South Africa's Minister of Public Enterprises. "We are viewing the next two years as being critical."
The electricity shortages are being blamed on increased demand after years of economic growth in the country.
South Africa's shutdown only adds to the pressure on gold prices created by the combination of a weak dollar, rising oil prices, and unstable equity markets.
Earlier this week, analysts at Morgan Stanley and Credit Suisse raised their outlook for the metal to $950 in 2008 and $1,000 in 2009. Barclays Capital is even more bullish: Their forecast expects that gold will reach $1,000 by this summer, according to the Financial Times.
