Why Gold Miners Are Getting the Shaft

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Next they'll be having an "everything must go" sale at Fort Knox. The latest gold rush has tens of thousands of miners in South Africa, Russia and other gold-producing countries facing unemployment –- because there's a rush to sell. The Bank of England offloaded 25 tons on Tuesday, dragging the price of gold down to a 20-year low. And there's worse to come, as the International Monetary Fund proceeds with plans to sell $2.6 billion of its own gold reserves to raise money for debt relief to poor countries.

The bad news for the miners is that the price of gold is unlikely to rise again anytime soon. "Gold was traditionally considered a hedge against inflation," says TIME senior business writer Bernard Baumohl. "Now there’s no reason to hold on to it because there’s no threat of inflation in the foreseeable future. It’s not an attractive investment because it offers no return, and the supply has grown despite falling demand, driving the price even lower." The best hope for the miners is an unforeseen catastrophe. "Right now it would take a major shock in the global economy and political system –- such as a world war or the total collapse of a key economy –- to give the gold price a bounce." Perhaps Russia could organize something.