Gold has historically held strong significance for Colombia. This is because gold has typically meant economic assurance in times of uncertainty for the South American country. On March 28, 2024, gold prices skyrocketed and currently sit at $2.225 per ounce.
Why has there been a price surge for gold?
The price surges in gold are likely due to low interest rates and a marked increase in geopolitical tensions. This has deep roots in the global gold standard, a system that was in place after the Second World War and lasted until the Yom Kippur War of 1973. Now gold is making a comeback as a safe and reliable investment. While the pandemic raised worldwide inflation, unemployment, and complex economic scenarios, gold is a commodity that has remained relatively stable.
Analysts claim that the lowering of interest rates in the next few months will cause a sustained purchase of the precious metal by national banks.
What does this price surge mean for Colombia?
Gold producers and manufacturers in Colombia are going to be greatly benefited by this surge. However, the more underrated beneficiaries will be formalized small miners. An example of these small mining firms is Aris Mining, which mines gold in Segovia, Antioquia, and Marmato, Caldas. The company has created an affiliation program for small miners, which, as of March 2024, covers around 40% of production.
The mining firm has claimed that any surge in gold prices is greatly beneficial for the country and region where extraction takes place. The payment of perks and taxes makes this a very profitable surge. The firm has also acknowledged that they re-invest these profits in social projects in the region, notably in education and infrastructure.
The most significant effect of the surge in gold prices could be further investment in Colombian mining. Aris Mining plans to increase production by 50%. The investment that such an increase would command would be $300 million and would generate around 7.600 new jobs.
This means that almost 30,000 would be affiliated with Social Security. The further investment will also mean Colombia gains somewhere in between $100 and $220 million in the short term.
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