Repercussions from last week's political crisis in the United States have affected world money markets -- and dramatically increased the price of gold.
Repercussions from last week's political crisis in the United States have affected world money markets -- and dramatically increased the price of gold. Loss of confidence in the American economy made the dollar plunge -- and as is traditional in time of financial uncertainty buyers have turned to gold as a safe investment.
SYNOPSIS: The rand Refinery near Johannesburg is the largest gold processing plant in the world -- its raw material comes from about fifty major and a dozen smaller South African gold mines, which between them reduce more than tow thirds of the world's supply of newly mined goal. From here the refined gold - mostly in the form of 12.5 kilogramme (400 Troy ounce) commercial bars -- flows into a two-tiered world market system. Last week the price on the London bullion market reached a record 303.85 US dollars an ounce.
The rand Refinery also produces blanks which are minted into Krugerrand gold coins. Instead of having a face value they have the weight of the fine gold content embossed on the reverse side -- but they are legal coins rather than medallions.
The dollar had been weakening on the world money markets since President Carter's energy speech. As it feel the gold rush started, with buyers seeking a secure alternative to paper currency. In South Africa there is general rejoicing as millions of extra Rands pour into the national coffers.
London is one of the world's most important bullion markets. Trade here last week reflected the general anxiety in foreign exchange circles as the dollar plunged in value against the British pound and other European currencies.
Although Britain is a centre for world trade in gold, it too is suffering economic difficulties. But this has not reflected the value of the pound abroad, which has been bolstered by confidence in North Sea oil.
But Hong Kong was the major world marked where the price of gold first breached the 30 dollars an ounce barrier. Dealers said last week that trading was hectic and heavy with fresh demand from local and overseas operators.
In fact Visnews' Hong Kong correspondent reports that at one stage people were fighting to but gold -- harassed dealers had to struggle to cope with the demand.
Here the story was the same as in Europe -- with dealers attributing the panic for gold to disappointment in President Carter's energy plan and the weakness of the U.S. dollar. Towards the end of last week gold had also broken the 300 dollar mark in several smaller centres.