Gold Rates & Charts, History, Investment Strategy etc.
Gold bars have a standard weight ranging usually from 1 gram to 1 kilo (1000 gram). The 400 ounce (12.44kg) gold bar is mostly traded between central banks and international institutions. The biggest gold bar has a weight of 250kg.
The unit of measurement for gold bars is gram, or kilo (1000 gram). To a lesser extend, also ounce (31.10g), tael (37.32g, 1.2oz) and tola (11.66g or 0.38oz).
First, gold is a finite resource, whose underground reserves will eventually be completely extracted. Second, gold population is growing and prospering. This increases gold demand for jewellery and industrial purposes. Third, central banks have been increasing their gold reserves. All of this points towards an inescapable raise of gold’s value and its price.
Between 10 and 15 per cent of the annual gold production is used in the industry.
From 2008 until 2009 industrial demand for gold dropped by 13 per cent.
In 2010 the gold supply stood at 4108 tonnes (2659 tons from mine production, neg. 116 tons hedging, 87 tonnes central banks sellings and 1653 gold recycling). Demand from industry was 420 tonnes, or 10 per cent. This is 287 tonnes for the electronics industry, 50 tonnes for dentistry, and 83 tons for other industrial purposes. In contrast, jewellery demand stood at 2060 tonnes.
From 1900 until 2010, that is 110 years, world gold production has been steadily risen, except for four periods. See chart for historical world gold production numbers:
Gold is a rare metal. All extracted and still available gold has a total weight of 165 thousand tons. If the precious metal were melted into a cube, it would measure only 20 meter (65.6ft) into each direction.
The Forbes Global 2000 includes 12 gold companies. The biggest is the US Newmont Mining; six are from Canada, two from South Africa, and one from Australia, Peru and Russia (see table).
Continue reading “Demand and Supply of Gold: Gold Production” »
The first three parts about the history of gold presented the Classical Era, the Mediaeval Times, the Early Modern Times, the period of the Classical Gold Standard (1816 – 1914) and the Interwar Period (1918 until 1939) and finally the Bretton Woods System from 1944 until 1977. Now, the final part sheds light on the gold rate after the Bretton Woods break-down. This time can be grouped into three periods: a rise of the gold price from 1971 until 1980 (bull market), its fall thereafter (bear market) and an ongoing increase since 2001 (bull market).
Continue reading “History of Gold – Part 4: Bull and Bear Markets” »
Continue reading “History of Gold – Part 3: Bretton Woods System” »
The United States and many countries in Europa introduced gold standards in the second part of the 19th century. Here the national currency is backed by gold reserves. This kept the gold rate quite stable. In 1971 the United States abolished the gold standard. This left the gold exposed to market mechanisms.
The gold price today is determined by interplay of supply and demand for gold. Further, it is also influenced by short-term events and speculations and long-term expectations. Other factors influencing the gold rate are the oil price and the current dollar rate, as gold is traded in this currency.
Read the second part to learn how central banks and investors influence the gold rate (here’s the first part about factors influencing the gold price).
In the first part of this article we have learnt about two forces that shape the gold rate: first, industrial and personal demand and second national emergencies such as war, economic crises and imbecile leaders. The next two important factors are central banks and, of course, speculating and investing.
gold investing and central banks
Continue reading “The 4 Important Factors that Affect the Gold Rate – Part 2” »
Continue reading “Four Important Factors Affecting the Gold Rate – Part 1” »
This gold chart shows the development of the gold price over a period of 177 years – from 1833 to present. Two remarkable facts can be seen in the gold history: A stable gold price of US$ 20.67 per ounce throughout the 19th century until 1933. The reason was the US government who set a fixed price. In 1933 US President Franklin D. Roosevelt prohibited the possession of gold by private individuals. A year later, the official gold rate which was increased to US$ 35.08 per ounce.
Even though investing in gold is a great way to diversify your assets and which for its own proves profitable over the long term, there are several risks involved. These risks of gold investment hinge partly on the type of investment vehicle: buying physical gold, purchasing shares of gold mines, or investing with mutual funds, futures or options. The first risks center on physical risks, followed by political risks, market risks, exchange rate risks and technological risks.
Physical Risks: Investing directly in metals, by purchasing bullions (American Eagle, Krugerrand, Canadian Maple Leaf etc.) or numismatic coins opens the door to a number of risks. First, physical gold can be stolen, second you might lose it, third it’s simply a forgery. Not a risk, but a burden, is the storage fees, if the gold coins should lay in a bank’s safe.
First, gold is a finite resource. Meaning, there is only a certain amount of gold on the planet for extraction and selling. Considering population growth and the increasing demand for gold, this precious metal will become only more valuable in the long-term.
These days, the financial news and also the network programs have started to report the price of gold on a regular basis. During the years from 1980 to 2000, there was hardly any mention for the price of gold. There was not much interest at this time, plus the price was always declining or staying steady.
Keeping track of what is taking place in the economy could be as simple as paying attention to the prices on the gold chart. While knowledgeable investors pay attention to the specifics for the declining dollar, sluggish economy and poor job creation, a basic barometer for the average person could be the price of gold. Whenever the value of the dollar declines, investors need to keep their riches in a safe place and so they will modify their holdings from currency to gold.
This is the first part of a four part series about the history of gold as a means of payment, and also the development of the gold standards. The first three periods are the Classical Era, the Mediaeval Times and the Early Modern Times.
5,000 years ago in Egypt and the Middle East: gold and other metals fulfilled the classical function of money (exchange, means of payment, and value storage). However gold coins were not yet widely used in economic transactions.
In the first part of the history of gold, three periods were presented: the Classical Era, the Mediaeval Times and the Early Modern Times. Now follows the second part of the series, covering the period of the Classical Gold Standard (1816 – 1914) and the Interwar Period (1918 – 1939).
Continue reading “History of Gold – Part 2: Classical Gold Standard and Interwar Period” »
