Rich >Doest the Use it or Lose Land Act concern you???
As an investor, not particularly. I presume certain miners must be pretty upset about it but it seems they have adjusted to it. We never read about it in the papers.
The idea behind it (which I understand is similar to what happens in Canada where the State also owns all the mineral rights) is that the mining companies develop the mines and just don't sit on the "reserves" and hog them. As it is, the big mining houses obtained these rights for nothing just because of existing legislation (which they were able to manipulate in their favor). For example, the mineral rights under my house in Johannesburg belongs to AngloAmerican and not to me. They paid nothing for the rights yet I bought the property.
Anyway, we all understand what it's about. It's simply theft just like taxation or affirmative action is. In fact, the new Land Act is both. However, the upside is that with the "redistribution" of some wealth both to local blacks and the ANC government, both can now lobby for an increase in the price of gold --- which, clearly they have done. Or perhaps I should say, they have lobbied for the US government etc to stop suppressing it.
SA is the regional powerhouse in Sub-Saharan Africa and is important to the West both because it is strategic to the rest of the region and because it has (superficially) a friendly black government. In fact, the rift between West and East passes right through SA. An increase in the gold price is vital to the preservation and, indeed, to the expansion of the SA economy. The West knows this and that is why I think, for political reasons, they will allow it. Possibly even facilitate it. It may not be a coincidence that US Finance Secretary O'Neill was here only last week.
In fact, and this is what I thought you were worried about, the increase in the gold price together with the fall in the USD has contributed to a sharp increase in the value of the rand. This, in turn, has led to a fall in the SA price of gold.
sharenet.co.za
Meanwhile, the gold price has risen in dollar terms and the gold share prices have risen on most markets, including the JSE. So, it is clear that, in the face of seemingly adverse fundamentals, SA gold stocks have been re-rated upwards on world markets. |
