S. African Gold Loses Luster as Apartheid Protests Grow
NEW YORK (AP) _ Andrew Rasheed, a 27-year-old electrician, says he bought a gold wedding ring for his fiancee without thinking it could have come from South Africa.
″If I’d known this piece of gold was mined in South Africa, I would not have bought it,″ Rasheed said. ″As a black man, the thought of putting a South African gold ring on my wife’s finger is distasteful to me.″
″But there is no way of knowing where this came from and I’m sure they wouldn’t say even if they did,″ Rasheed said, gesturing toward salesmen in a jewelry shop in New York’s jewelry district off Fifth Avenue.
Rasheed was one of several shoppers - both blacks and whites - who expressed a strong opinion against South Africa’s policy of racial segregation, known as apartheid.
Yet they were shopping in the diamond district, where, one dealer said, chances of buying South African gold rings over those from other areas are ″better than 50-50.″
South Africa accounts for about 60 percent to 70 percent of the world’s gold bullion production, said Charles R. Stahl, editor of Green’s Commodity Market Comments, a biweekly economic newsletter.
Although South Africa sells its bullion in London and Zurich, Stahl said a bulk of refined and crafted gold products such as rings, necklaces and earrings are imported to the United States.
When they reach jewelry stores in America, many people including retailers do not know where the ″base metal″ came from, he said.
It is this anonymity of the gold bullion’s origin on which some critics base their argument against a proposed bill in Congress aimed at banning the import of the South African gold coin, Krugerrand. They say the South African government would mint less Krugerrands and try to export more gold bullion.
South Africa has produced 40 million ounces of Krugerrands over a period of 10 years, Stahl said. In 1984, it produced 2.6 million ounce of Krugerrands, or about 13 percent of the 21 million ounces of gold bullion it produced.
The Krugerrand and Canada’s Maple Leaf are two major one-ounce gold coins being sold in international bullion markets. Many people buy the 24-karat gold coins as a hedge against inflation.
The House of Representatives recently passed a bill that would prohibit imports of new Krugerrands as part of economic sanctions to pressure South Africa’s white-minority government to dismantle its apartheid system. The Senate is considering a similar bill.
But even without an import ban, the increased publicity and spreading protests against apartheid have already taken a toll on the sale of Krugerrands in the United States.
George Parola, a New York gold coin dealer, said there has been a sharp drop in the sale of Krugerrands in recent months.
″The anti-apartheid legislation would not affect the transaction of Krugerrands already in the country,″ Parola said. Nevertheless, he added, investors ″are not buying them as much as they used to, probably because of the uncertain future of the coins.″
″Krugerrands outsold Canada’s Maple Leafs 3-to-1 only a year ago,″ Parola said. ″But since early March, the trend has completely reversed itself. We are now selling them at a ratio of 100 Maple Leafs against 35 Kruggerands a day.″
Sales of Krugerrands declined to 44,000 ounces in April and 60,000 ounces in May from an average monthly sales of 200,000 to 250,000 ounces a year earlier, Stahl said.
″Although the price of gold went up about $50, to $341 an ounce, in New York last month, the drop in sales of Krugerrands is too steep to attribute it only to the price increase,″ he said.
Officials of International Gold Corp., which imports Krugerrands, refused to talk to The Associated Press but issued a terse statement, saying that ″the American gold market has not been conducive to the imports of gold coins.″