In 2010, gold processed to jewelry accounted for 54 per cent of all gold purchases, making jewelry the biggest contributor to gold demand. That is a rise of 17 per cent from 2009 to 2010. The increase is even more remarkable, as the gold price increased in the same period by 26 per cent. The biggest buyer of gold for jewelry is India, with 745 tonnes, followed by China (400 tonnes) and the United States (128 tonnes).
Gold has been used for jewelry for 6,000 years. The reasons are its rarity, ease of mechanical processing, resistance to corrosion and its exceptional color.
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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.
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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:
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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).
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What explains the current Bear Market for gold?
The beginning of the 21th century is witness of a long and mostly continuous rise in the gold rate from US$ 265 per ounce at the beginning of 2001 until more than US$ 1400 ten years later. This translates into a gain of 528%, which is a stark contrast to the previous 20-year long bear market.
Continue reading “Gold Rate: Explaining the Current Bull Market (2001 – )” »
1 kg gold bar from Switzerland, fine gold 999,9 Union Bank of Switzerland (UBS)
(c) Wikimedia Commens
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” »
1 oz (Troy ounce) of fine gold, 999.9, with certificate from Switzerland (Argor Heraeus SA)
(c) Wikimedia Commens
What is the gold rate in the United States?
See the following charts for current gold rates in the USA. Of course, the official gold prices changes only during trading hours. Therefore, there is no change in the gold rate on the weekend and in the evening.
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In the first and second part of the history of gold, five periods were 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). Now follows the Bretton Woods System which lasted from 1944 until 1977.
Continue reading “History of Gold – Part 3: Bretton Woods System” »
What were the reasons for the mediocre development of the gold price from 1980 until the new millennium?
The bull market for gold in the 1970s can be explained by the end of the gold standard, the begin of gold trade, economic stagnation in the West, the oil embargo and several wars and revolutions.
Continue reading “Gold Rate: Explaining the 1980 – 2001 Bear Market” »
This article explains the reasons for the jumps of the gold rate during the 1970s.
At the beginning of the 1970s, the gold rate was at US$ 35. Ten years later the price stood at US$ 870 per ounce. This is a percentage gain of 2,485%. In contrast, during the same time the Dow Jones Industrial Average increased only from 809 to 839 points. This represents a total gain of 3.7%; not per year, but for the whole decade.
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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.
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These are the newest gold rate charts (automatically updated) for 1 ounce of fine gold (99.9% of fineness, or 24 carat) in US dollar.
The gold rate charts are from today. Its rates are from the New York Commodity Exchange (NYMEX) and the London Bullion Association (Gold Fixing).
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Here is the gold rate live. The three charts include data of the last 30 days, the last six months and also 5 years.
Be reminded, that a live gold rate is of course only changed during trading hours. That is, gold rates that are set at New York Commodities Exchange (NYMEX) only change when the NYMEX is open. Therefore, gold rates do not change over night, or at weekends.
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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” »
What is the rate for gold?
See the chart for today’s gold rate.
The gold price is determined at several places around the world. The most important ones are in London at the London Bullion Market Association (LMBA). The price for gold is fixed two times a day – in the morning and afternoon – and published in United States dollar, euro and British pounds. This is called the London Gold Fixing. The second gold fixing location is New York, where this happens at the Commodity Exchange (COMEX, NYMEX division).
What factors determine the rate for gold? As all commodities, gold is exposed to the market forces of supply and demand. Supply refers to gold production (mining), gold recycling, and selling by market actors such as central banks, (exchange traded) funds and investors. Demand stems also from central banks, funds and investors and of course jewelry and other industrial requirements.
Gold can be bought and sold as “paper gold” from banks or directly from brokers. Physical gold (coins and bars) are in stock at gold shops and internet auctions.
What is the rate for gold in 2012 and beyond? Let’s see …
What are the causes that the gold rate goes up and down? 1. personal and industrial demand, 2. war and national emergencies, 3. central banks and 4. Investors.
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.
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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.
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