Agreement of People website

Sign here if you support the campaign for a real democracy

Our blogs


AWTW FacebookAWTW Twitter

Your Say



Gold soars: $ crashes

The price of gold and other precious metals is fast approaching record levels. The continued weakening of the dollar against other currencies – the lowest ever against the euro, together with spiralling prices for oil and other key commodities point to a deepening crisis for the global economy.

Crude-oil futures have reached a record $93.20 a barrel. Mexico has shut a fifth of its production. In the Middle East tensions involving Iran, the world's second-largest holder of oil reserves, and Iraq, the third-biggest, are building up. US central bank, the Federal Reserve is expected to make a further interest rate cut today, following the first cut in four years on September 18th, to 4.75%, as it attempts to lessen the impact of the deepening recession. Its action risks adding to the already rampant inflation resulting from the period of too-easy credit that ended in the sub-prime mortgage crash. 

Investors looking for an inflation-proof home for their money have been turning to gold and other precious metals, thus driving prices to record levels. Though its use as the measure of all paper currencies was ended in 1971, gold continues to be used as a reliable defence against the falling value of paper money. At $798.30 an ounce, yesterday’s speculative price of gold for delivery in December is 24% higher than at the beginning of this year.  This is the highest since the 1970s when huge inflation and deep recession produced the all-time record of $830 in 1980.

“The momentum in gold is building as the bleak outlook for the dollar becomes more apparent,” said James Turk, founder of, which had $214 million of gold and silver in storage for investors at the end of September. Investment bank Credit Suisse forecasts that the gold price will soar to more than $1,000 per ounce over the next five years as dwindling supply of the precious metal combines with increased demand. New sources are being opened up at a far lower rate than older mines are dying.

The increasing price of gold on global markets has encouraged workers to push for higher wages. Walkouts and strikes have occurred this year at mines in Papua New Guinea, in Tanzania and in Peru, a leading global metals producer. A nationwide strike in Peru is set for next week with 22 of 74 unions in the federation starting action on November 5. Over the weekend, the government set a new wage for union workers of Southern Copper in Peru after negotiating an end to an eight-day strike earlier this month. Meanwhile, union leaders from Barrick Gold’s Pierina mine in Peru and company officials said on Tuesday they reached a deal to raise wages and avert a strike. In the company’s Bulyanhulu gold mine in Tanzania work has been halted due to what it termed an “illegal” strike, and it has fired about half of the mine's work force.

The labour conflicts in the mining industry will add to growing uncertainties in global commodity markets, already destabilised by the banking crisis and concerns over rising food prices.

Gerry Gold
AWTW economics editor
31 October 2007

Comment on this article

Your name

Your E-mail (we will not publish your E-mail)