The high price of bullion; money printing Zimbabwe hikes gold by 760%

HARARE, July 25, 2007 (AFP) – Zimbabwe’s central bank on Wednesday increased the price of gold by 757 percent in a bid to curb rampant smuggling of the precious metal and cover soaring production costs, an official said. Zimbabwe’s gold production is this year expected to drop to about 8,700 kilogrammes from 11,354 kilogrammes last year, a far cry from 27,000 kilogrammes produced in the industry heyday in 1989. “With immediate effect, the support price has been increased from the current 350,000 Zimbabwe dollars per gram (1,400 US dollars on the official market, but two US dollars on the parallel market) to three million Zimbabwe dollars per gram,” central bank governor Gideon Gono said in a statement.

“As a country, our gold production levels have lately fallen victim to escalating costs as well as elements of indiscipline, sidemarketing and smuggling.”

Gold miners are paid 60 percent of their money in US dollars while the balance is paid out in the local currency.

Gono expressed concern at suppliers who increase the prices of their goods and services each time the central bank increases the price of gold, eroding the benefits of the producers.

“What we have noted with serious concern is a callous pat