TEXT OF INTERVIEW
Stacey Vanek-Smith: As the value of the dollar has dropped, the value of gold has hit record highs, and now supplies are running low. Ambrose Evans-Pritchard is the international business editor at the Daily Telegraph in London. Ambrose, thanks for joining us.
Ambrose Evans-Pritchard: It’s a pleasure to be with you.
Vanek-Smith: Why do people like to buy up gold when the value of the dollar goes down.
Evans-Pritchard: Well I think the dollar system has basically dominated the global economy since the Second World War. There is this feeling out there that we’re in a kind of transition phase. America has lost its grip over the global monetary system, but nobody else has really stepped in to replace it. No currency can really be fully trusted, and so gold is the obvious kind of fallback option. It’s quite understandable.
Vanek-Smith: So is there anything else that’s been driving up the price of gold?
Evans-Pritchard: The other thing that people overlook is that the supply of gold from mines has just been falling and falling and falling. It’s basically been dropping by about a million ounces a year. So effectively we have peak gold. They can’t find new sources of ore despite huge efforts and money being poured into exploration.
Vanek-Smith: It’s so interesting because I think we’re so used to thinking in terms of currency that it’s kind of almost a strange thing for us to think about, that there is actually a limited supply of gold; when you buy gold, you actually buy physical gold.
Evans-Pritchard: Well that’s right. I mean the central banks — the big banks of Europe and other parts of the world — they’ve been selling it, preferring instead to buy U.S. treasuries and things like that, but that’s rather proved to be a rather bad bargain actually for these governments. The thing is now is that the central banks, governments, of the emerging economies — China, India — are buying gold, so the whole dynamics of the market has changed.
Vanek-Smith: What do you expect to see happen with gold as the supply declines and the demand increases?
Evans-Pritchard: Well immediately I think it’s dependent on the dollar. If the dollar stabilizes and begins to recover, gold could sort of cool off a bit. But they can’t find new sources of ore around the world. If countries like China accumulate massive reserves, putting more and more of this into gold, I would say the price over time just have to keep going up. So we may see a step change to a much higher, sort of permanent level.
Vanek-Smith: Ambrose Evans-Pritchard is the international business editor at the Daily Telegraph. Ambrose, thank you for joining us.
Evans-Pritchard: Thanks a lot.