Gold mines shut down, prices go up
Power outages in South Africa are causing gold mine shutdowns nationwide, which is raising gold's cost. Each day without steady power is costing the country's mining industry $27 million. Gretchen Wilson reports.
A South African gold nugget (Fati Moalusi/AFP/Getty Images)
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Scott Jagow: The price of gold moved higher today. It's flirting with record highs around $920 an ounce. One reason is the dollar. And another interest rate cut will only weaken the dollar more.
But there's a second reason gold prices are so high: South African gold mines are shut down because of severe power outages in that country. Gretchen Wilson reports from Johannesburg.
Gretchen Wilson: The shut down affects the world's biggest platinum producer, Anglo Platinum, as well as major gold producers. Each day without steady power costs the country's mining industry $27 million.
South African officials have called the power cuts a "national emergency." And they're scrambling to fix it with a mix of rationing and reduced exports to neighboring countries.
Economists say the power cuts and the mine closures may have enormous, far-reaching effects on South Africa. Experts say it will affect its currency, trade deficit, and ability to attract foreign investment.
Dennis Dykes is chief economist at South Africa's Nedbank:
Dennis Dykes: This is a crisis that really has to be addressed. At the moment, we are working on the assumption that it will be sort of a month-long problem.
Financial experts here say they haven't had so many panicked calls from investors since the aftermath of September 11.
In Johannesburg, I'm Gretchen Wilson for Marketplace.
