Wednesday, February 20, 2008

Gold Fever! All Over Again

Here's an article by Elisabeth Malkin from today's New York Times about the effects of the dramatic rise in gold prices over the past couple of years. The article explains how employees of multinational mining companies have now gone out on their own to prospect in Mexico, backed by major capital from investors. We're worried that the rush has increasingly led to risky mining practices and is driving prospectors deeper into previously undeveloped territory in some countries, such as Brazil.

MAGUARICHIC, Mexico — In these mountains, where conquistadors once gouged gold from open veins in the mountainside, the hardened gold miner of film lore is giving way to a new breed of prospector: geologists and engineers, armed with sophisticated equipment and millions of investor dollars.

Largely American and Canadian, they toiled for global mining giants for years. But, now that the price of gold is near record highs, they are leaving their companies, raising capital to start their own prospecting start-ups and heading for Mexico. On Tuesday, an ounce of gold hit $929.30, up from $665 a year ago. Back in 1980, oil shock and economic gloom drove the price to $875 an ounce; that would be more than $2,000 today.

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