South Africa Outages, Economy Push Up Gold

Jan. 29, 2008 (Investor's Business Daily delivered by Newstex) --

Maybe it's an anxiety shelter, but gold has investors luminous these days.

The yellow metal hit an all-time high of $923.40 an ounce last week, as folks rushed to park their funds in the perceived safe haven of gold.

Since man began mining it, gold has been seen as a hedge against tough times. Current equity and credit market woes, record high oil prices and fears about the U.S. economy helped gold rise more than 30% percent in 2007.

While U.S. economy concerns are the biggest factor in the metal's jump, it's not just fear driving the price up.

First, the world's gold supply is reduced. South African gold mines have been shut down since Friday because of that country's severe power outages. South African officials have reduced exports and rationed power in emergency power-saving measures, but say there's no foreseeable end to the outages.

Power Outage

Every day without power costs the country's mining industry about $27 million and keeps gold supply in check.

Another factor in the rising price is Dubai's ongoing month long shopping festival. Analysts expect that the country -- a major gold-trading hub -- will see bigger gold jewelry sales during the festival.