Gold soars as a perfect storm begins to gather
Monday, 12 November 2007
If a preoccupation with the weather is a curiously English phenomenon, then nothing could be as compelling a story as a "perfect storm" - a rare occurrence in which several weather conditions come together to destructive effect according to Internet.
Gold, an important bellwether of the economic world, finds itself the beneficiary of such an occurrence, buoyed to within a whisker of the all-time high of $850 an ounce.
It was so different a decade ago. Up until 1999, the market for gold had been in decline and was characterised by flagging prices and volatility. The darkest hour for gold enthusiasts was on May 7, 1999 when the Treasury announced it was going to sell Britain's gold reserves.
So what has changed? Part of the answer is that there have been deep structural changes in the commodity markets. The prices of most commodities have risen between threefold and tenfold in the past five years.
Yet despite high prices, global gold production is falling. South Africa, the world's largest producer, is turning out barely 25% of what it did in 1970. Production elsewhere has also peaked - in America in 1998, in Australia in 1997, in Canada in 1991 and in Brazil in 1982.
Gold, an important bellwether of the economic world, finds itself the beneficiary of such an occurrence, buoyed to within a whisker of the all-time high of $850 an ounce.
It was so different a decade ago. Up until 1999, the market for gold had been in decline and was characterised by flagging prices and volatility. The darkest hour for gold enthusiasts was on May 7, 1999 when the Treasury announced it was going to sell Britain's gold reserves.
So what has changed? Part of the answer is that there have been deep structural changes in the commodity markets. The prices of most commodities have risen between threefold and tenfold in the past five years.
Yet despite high prices, global gold production is falling. South Africa, the world's largest producer, is turning out barely 25% of what it did in 1970. Production elsewhere has also peaked - in America in 1998, in Australia in 1997, in Canada in 1991 and in Brazil in 1982.