Gold as an investment

Jennifer Fisher Jewelry January 11 at 8:

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Of all the precious metals , gold is the most popular as an investment. The gold market is subject to speculation and volatility as are other markets. Compared to other precious metals used for investment, gold has the most effective safe haven and hedging properties across a number of countries.

Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented gold standards in the latter part of the 19th century until these were temporarily suspended in the financial crises involving World War I. The system existed until the Nixon Shock , when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system.

The last major currency to be divorced from gold was the Swiss Franc in Since the most common benchmark for the price of gold has been the London gold fixing , a twice-daily telephone meeting of representatives from five bullion -trading firms of the London bullion market.

Furthermore, gold is traded continuously throughout the world based on the intra-day spot price , derived from over-the-counter gold-trading markets around the world code "XAU".

The following table sets out the gold price versus various assets and key statistics at five-year intervals. Like most commodities, the price of gold is driven by supply and demand , including speculative demand.

However, unlike most other commodities, saving and disposal play larger roles in affecting its price than its consumption. However, estimates for the amount of gold that exists today vary significantly and some have suggested the cube could be a lot smaller or larger. Given the huge quantity of gold stored above ground compared to the annual production, the price of gold is mainly affected by changes in sentiment, which affects market supply and demand equally, rather than on changes in annual production.

Central banks and the International Monetary Fund play an important role in the gold price. Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late Some bulls hope that this signals that China might reposition more of its holdings into gold, in line with other central banks. Chinese investors began pursuing investment in gold as an alternative to investment in the Euro after the beginning of the Eurozone crisis in China has since become the world's top gold consumer as of [update].

It is generally accepted that the price of gold is closely related to interest rates. As interest rates rise, the general tendency is for the gold price, which earns no interest, to fall, and vice versa. As a result, the gold price can be closely correlated to central banks [ clarification needed ] via their monetary policy decisions on interest rates. For example, if market signals indicate the possibility of prolonged inflation, central banks may decide to raise interest rates, which could reduce the price of gold.

But this does not always happen: The price of gold can be influenced by a number of macroeconomic variables. Gold, like all precious metals, may be used as a hedge against inflation , deflation or currency devaluation , though its efficacy as such has been questioned; historically, it has not proven itself reliable as a hedging instrument.

The currencies of all the major countries are under severe pressure because of massive government deficits. Deutsche Bank's view of the point at which gold prices can be considered close to fair value on 10 October [34]. Jewelry consistently accounts for over two-thirds of annual gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonization. Jewelry and industrial demand have fluctuated over the past few years due to the steady expansion in emerging markets of middle classes aspiring to Western lifestyles, offset by the financial crisis of — In recent years the recycling of second-hand jewelry has become a multibillion-dollar industry.

The term "Cash for Gold" refers to offers of cash for selling old, broken, or mismatched gold jewelry to local and online gold buyers. There are many websites that offer these services. However, there are many companies that have been caught taking advantage of their customers, paying a fraction of what the gold or silver is really worth, leading to distrust in many companies.

When dollars were fully convertible into gold via the gold standard , both were regarded as money. However, most people preferred to carry around paper banknotes rather than the somewhat heavier and less divisible gold coins.

If people feared their bank would fail, a bank run might result. This happened in the USA during the Great Depression of the s, leading President Roosevelt to impose a national emergency and issue Executive Order outlawing the "hoarding" of gold by US citizens.

There was only one prosecution under the order, and in that case the order was ruled invalid by federal judge John M. Woolsey , on the technical grounds that the order was signed by the President, not the Secretary of the Treasury as required. The most traditional way of investing in gold is by buying bullion gold bars. In some countries, like Canada , Austria , Liechtenstein and Switzerland , these can easily be bought or sold at the major banks.

Alternatively, there are bullion dealers that provide the same service. Bars are available in various sizes. Bars generally carry lower price premiums than gold bullion coins. However larger bars carry an increased risk of forgery due to their less stringent parameters for appearance. While bullion coins can be easily weighed and measured against known values to confirm their veracity, most bars cannot, and gold buyers often have bars re- assayed. Larger bars also have a greater volume in which to create a partial forgery using a tungsten -filled cavity, which may not be revealed by an assay.

Tungsten is ideal for this purpose because it is much less expensive than gold, but has the same density Good delivery bars that are held within the London bullion market LBMA system each have a verifiable chain of custody, beginning with the refiner and assayer, and continuing through storage in LBMA recognized vaults.

Bars within the LBMA system can be bought and sold easily. If a bar is removed from the vaults and stored outside of the chain of integrity, for example stored at home or in a private vault, it will have to be re-assayed before it can be returned to the LBMA chain. The LBMA "traceable chain of custody" includes refiners as well as vaults. Both have to meet their strict guidelines. Bullion products from these trusted refiners are traded at face value by LBMA members without assay testing.

By buying bullion from an LBMA member dealer and storing it in an LBMA recognized vault, customers avoid the need of re-assaying or the inconvenience in time and expense it would cost. Wolf Richter had a piece on margin debt: Notice how it parallels the move down in equities. Its a real pity this information isn't available in real time.

Well, it IS available in real time to the insider-banksters, just not to the great unwashed like us. We get it with a one-month delay. That tells you just how useful the data actually is. On the 'recession prediction' subject, Industrial production released Friday looked quite strong: That's probably due to the rally in oil prices.

There is plenty of bad news coming from China. Weekly trends in order of strength: Sections of this page. Email or Phone Password Forgot account? See more of Gold on Facebook. Nach langem Warten ist nun endlich wieder der jährliche Gold-Report Juni wurde der diesjährige "In Gold we Trust"-Report im Rahmen einer internationalen Pressekonferenz präsentiert.

Most analysts look at only one or two of these vectors. Incrementum's annual 'In Gold we Trust' report is the only research that looks at all three in depth and in an integrated fashion. It is the most eagerly awaited and closely read report in the gold community. Gold shared a link. Zum jährigen Jubiläum der Münzprägestätte Wien erwartet Münzsammler eine besondere Serie von drei Silberunzen, die jeweils historische Aspekte des Gründungsjahres beleuchten.

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