The picture shows a 2.5 gram gold bar which is around 0.08 fine ounce. The gold bar has a fineness of 999.9 (fine gold) and was produced by PAMP SA (Produits Artistiques Métaux Précieux), Switzerland.
The company was founded in 1984 and has a refining capacity of more than 450 tonnes per year. PAMP produces good delivery bars and is one of the world’s leading refiners of precious metals.
The picture shows a 500 gram gold bar which is around 16 fine ounce. The gold bar has a fineness of 999.9 and was produced by Valcambi SA, Switzerland.
This Swiss Refinery was founded in 1961 and belongs to the European Gold Refineries Holding SA (“EGR”) which is equally owned by the original Valcambi founders and Newmont Mining Corporation.
A 5 gram gold bar from Credit Suisse with a fineness of 999.9. This fine gold bullion was produced in Switzerland.
This 1 gram gold bar is produced by the Istanbul Gold Refinery, IAR, with a fineness of 999.9. The 1 gram gold bar has a length of 8.5mm and a width of 15mm and is 0.03215 troy ounce.
The picture shows a UBS kinebar (Argor-Heraeus) with certificate.
A kinebar is a gold bar with a kinegram on its reverse surface. This security device is similar to a hologram which depicts a 3d design, whereas a kinegram shows a 2d design. The kinegram is a registered trademark of OVB Kinegram Corp., Switzerland. UBS has used the kinegram on gold bars since 1993. The Argor-Heraeus kinebar is produced by UBS, as Argor-Heraeus is a subsidiary refinery of this company.
Picture credit, cc license: wikipedia user Watercolour
The biggest gold bar in the world has a weight of 250 kg (551.150lb). With $1500 per ounce, this gold bar has a value of around $13,224,000. The gold bar was manufactured by Mitsubishi Materials Corporation on 11 June 2005 at the Naoshima Smelter & Refinery in the Kagawa Prefecture, Japan. This gold bar was displayed on 11. July 2005 at the Toi Gold Mine, Japan. It has been included in the Guinness Books of World Records for the world biggest gold bar.
Gold Bar picture credit, cc license: wikipedia user PHGCOM
Portfolio diversification refers to reducing investment risk by purchasing a variety of assets. A random selection of assets already reduces risk, compared to a one-asset investment. However, diversification is more efficient, if the portfolio assets are not correlated, i.e. they do not move into the same direction. Investors seek a portfolio that has a minimum of risk and a maximum of return.
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Gold is often regarded as a perfect inflation hedge. Let’s discuss this issue by answering the following three questions: First, what is inflation. Second, what are the reasons for inflation? Third, is gold an effective hedge against inflation?
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Why the gold price can only go up in the long term
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.
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Searching for a correlation between gold and the US dollar seems to be awkward at first, as gold is traded in this currency. Would it not be impossible to determine a relationship?
Continue reading “The Gold-Dollar Correlation: A Mess Since 2009” »
Is there a relationship between gold and the stock price? One might expect an inverse correlation: When stock goes up, investors make more money at the stock market and thus sell their gold. This drives then the gold price down. However, data tell us otherwise.
Now let’s look at three graphs. All three show the Gold Price (London Gold Fixing PM) and the Standard and Poor’s 500 Index.
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Conventional wisdom suggests that there is a strong correlation between gold and inflation. When inflation goes up, gold follows suit. Likewise, a drop in inflation would lead to a fall in the gold price. This is because in times of high inflation, gold becomes a better option for investors. But this reasoning is wrong.
Continue reading “The Gold-Inflation Relationship: None” »
Is there a correlation between oil and gold? The first idea suggests a direct causal gold oil relationship, the second argument proposes an impact of oil on shares of gold companies, and lastly a theory argues that the gold and oil prices are driven by a common factor.
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A gold scam is either 1. downright fraud, 2. misrepresentation or 3. market manipulation. To be knowledgeable about gold scams is necessary to anticipate and avoid them.
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The political risk of gold investing means that the government can change laws and regulations that may harm your investment in gold. These government interventions can happen in the country of the investor or in another country. Both would have an impact on the gold price, as supply and demand, or the invisible hand of the market will be disturbed.
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Exchange risks refer to the exchanges where gold and futures are traded, and not to currency risks. The two major gold futures exchanges are the New York Mercantile Exchange (NYMEX) and the Tokyo Commodity Exchange (TOCOM). Trading at these and all other exchanges is subject to their rules and regulations. The exchanges can on purpose or accidentally foster market outcomes by changing their trading rules.
What events could happen at an exchange?
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The price of gold, as of every traded asset, is subject to the ups and downs of the market. The rate of this precious metal can fluctuate fundamentally. The volatility of gold must be a concern to all short- and long-term investors.
Its perceived value is shaped by demand and supply. The factors are gold production by gold mines, central banks, investors and the industry (jewelry, electronic etc.).
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The first downside of gold investment is the physical risk. Buying gold bars and coins exposes the investor to the risk of loss and theft.
Costs are involved to mitigate this risk. The transport of gold needs to be insured, gold has to be kept in a personal safe at home, or, better, in the bank’s safety deposit box. Here, renting fees incur.
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In 2010 investment demand for gold totalled 1,333 tonnes. This is 995 tonnes for bars and coins and 338 tonnes were purchased by exchange traded funds and similar products (Gold Bullion Securities, SPDR Gold Shares, Central Fund of Canada etc.). Compared to 2009, gold demand was down by 2 per cent in terms of quantity, but rose 23 per cent in value terms. In 2006 – 2007 private investors held accumulated for the first time more gold than all central banks together.
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Central banks, international entities (e.g. International Monetary Fund) and governments are the single largest holder of gold in the world. These institutions controlled end of 2009 16.2 per cent (26,780 tons) of the worldwide available gold. All ever produced gold is estimated to be 165,000 tons (5.321 billon ounces). This corresponds to a market value of 7,950 billion US dollar, based on a gold value of 1427 dollar per ounce.
These are the central banks and institutions with the top 20 gold reserves:
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