The interesting thing about the internet these days is that we can see the inter-play of gold prices and the international economic climate. We can read about laid-off retail workers in England, nervous buyers in Israel and the Mideast, and frightened consumers around the United States.
But we can also see a bright spot, like the gold market. The gold market is steadying fears around the globe as well. The reason? Historically, gold has been the benchmark of wealth and luxury across centuries, including in stressful economic times like we’re seeing. And because of the internet, we can peak into the history and current thinking in far away countries, for instance in the Philippines.
During the Great Depression that hurt the United States from the late 1920s to the early 1940s, a gold boom was underway in the Philippines, where Americans established the country’s first mining enterprises, according to a top Philex Mining Corp. official.
This bit of history has given Filipino miners hope that they can ride out a prolonged recession when it hits its hardest there in 2009.
It is only gold that offers a measure of hope for the industry next year, when the looming recession is expected to take its toll on the economy, said Louie Sarmiento, who is president of the Philippine Mine Safety and Environment Association.
“The gold mining activities will continue on account of the good price of gold, and there are projections they will be maintained, if not [escalate] next year,” he said.
According to the Jose Ernesto Villaluna, President of Philex Mining Corp., the sector takes comfort and refuge in the parallels between 2008 and the gold rush of the 1930s, when the US began experiencing the pangs of the 1929 depression.
“If you look at the Great Depression in the [1930s], the common denominator was gold,” Villaluna said. “[President Franklin Delano] Roosevelt upped the price of gold from $19 to $35 an ounce and that was when all the gold mines boomed.
He was referring to the enactment of a US Gold Standard, which defined the value of the currency of many countries against a specific volume of gold quantities. That was retracted when the American government introduced a gold reserve law making it illegal for people to own gold.
This law pushed gold prices from $20.67 per ounce to $35 per ounce at the time. Now it’s over $800 per ounce.
At the same time in world history, the gold industry experienced a boom, even in the Philippines growing from 89 mine claims applied for in 1905, to 544 mine stakes in 1906.
Gold has always been a store of wealth in times of uncertainty. It will be the stable place to be during whatever lies ahead. Gold continues to fulfill its role as an asset for uncertain times and demand is strong. It’s an investment you can be certain of, even as we continue to watch the markets in turmoil.
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Category: Gold Prices