Since the election of Barrack Obama II, gold-bugs across the globe didn’t demonstrate any slightest show of happiness. This is because the largest gold market in contemporary history was at its peak in the midst of a political landscape that is today’s. The United States, since its foundation in 232 years ago, has kept on tilting back and forth in as far as balance of power is concerned.
From 1972 to 1971, the prices of gold in The United States have continuously been fixed by the Federal government. There were recorded only three fixed- price changes in the 179 years of gold prices being fixed by the federal government.
Gold prices and the gold market performances have been closely related the President of the United States. Presidential affiliation also played a very big role in setting gold prices. Republicans were in-charge of the 1970 gold bull market and late 90s while the democrats dominated in the late 70s with a rise of gold prices at the rate of 256%.
Gold production and prices are equally affected by the political landscape and state of insecurity in the country. In Africa, Mali is a typical example. In 1990, it had no gold production activities but is Africa’s third largest producer today courtesy of stable security prior to the current instability. However, when President Amadou Toure was ousted from power in a coup recently, rebel groups took control of Northern Mali and crippled gold production. The post coup environment couldn’t allow for the shipment of gold mining equipment and many companies withdrew their workers. The mayhem in the country saw the exit of the existing mines minister and the appointment of a temporary one. This poor security condition in the north affected many companies. Great Quest was undesirably affected the country’s shift gold mining to phosphate in the north-east. Mining companies also had less access to capital and shares traded at very low discounts because of the escalated political risk. This has lessened production and gold prices have greatly soared owing to limited supply.
In India in 2013, gold became political when rules governing the importation of bullion import become more and more politicized. Shortages where realized in the jewelry business as the world’s top rated consumer of gold jewellery moved towards 2014 local elections. The regulations that were instituted after the harvest boom found most communities with much income, but with less gold in supply. Import duty was raised on imported gold and silver by ten percent with the aim of stopping bullion importation or inflow.
When the import duty was later cut-down by five percent, gold was high in august 2013 whereas the Rupee sank to minutest lows of all times on the currency market. The clampdown on
T bullion imports killed the jewelry business, clearly showing how gold prices today and politics go hand-in-hand.
