South African state utility Eskom has obliged Gibbs by contracting for more than 34 million metric tons of domestic grade and run-of-mine coal at 100 rand or more, a rate 50% higher than previously paid.

"Coal is the new gold," said Gibbs three weeks ago. That was no hyperbole. Gibbs, in fact, underestimated the upside potential for the black stuff. Spot prices for Central Appalachian coal rose nearly 41% in the first three weeks of February alone, while gold bullion eked out a gain of barely more than 1%.

The Central Appalachian market came into 2008 with a tight supply picture. Prices have been pushed higher because of increasing demand, declining production and higher costs.

Coal is used to produce 40% of the world's electricity. Supply disruptions have forced China, South Africa and India to cut back exports to meet domestic needs. And there's still not enough of the stuff to go ‘round.

Calls for even more price inflation could carry black gold to an even higher plateau by year's end.

Maybe it won't be so bad to get a lump of coal in my holiday stocking.

Source: U.S. Department of Energy