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The cause of the panic: empty mines

The price of gold continues to hit record highs, trading now above USD 900 an ounce.

The latest high prices for gold are part of an upward trend that began in April 2001. Analysts explain the bull market in gold by pointing to a slowing economy and the metal’s increasing scarcity in the ground. „Gold is inversely correlated to the dollar,” said George Milling-Stanley, an analyst for the World Gold Council, an organization funded by gold mining companies. „Gold is a safe haven in times of political as well as economic turmoil.” Trouble is, this extremely rare commodity is getting harder to find. Although gold is mined in more than 60 countries, it is estimated only 167,600 tons of gold have ever been mined. In comparison, 999 million tons of iron are extracted annually. Still, with inflation taken into account, the price is nowhere near as high as it seems. Although the USD 1,000-an-ounce mark does have an unfamiliar and ominous ring to it, Milling-Stanley points out that the benchmark is deceiving. The previous all-time high of USD 850 in 1980 was the result of „a slew of special circumstances.” After 28 years of inflation and a weak dollar, it will take a big push in the markets to surpass the 80s high in real terms. Gold would have to hit USD 2,200 an ounce in today’s dollars to match the 1980 price, Milling-Stanley said. (Gazdasági Rádió)