If you look at a page like this one, or if you look it up in an encyclopedia, you will find that the annual worldwide production of gold is something like 50 million troy ounces per year. Gold has a specific gravity of 19.3, meaning that it is 19.3 times heavier than water. So gold weighs 19.3 kilograms per liter. A liter is a cube that measures 10 centimeters (about 4 inches) on a side. There are 32.15 troy ounces in a kilogram. Therefore, the world produces a cube of gold that is about 4.3 meters (about 14 feet) on each side every year. In other words, all of the gold produced worldwide in one year could just about fit in the average person’s living room!
This cube weighs 1,555,210 kilograms (3,110,420 pounds). A recent spot price for gold was $256.10 U.S. — using that number, all of the gold produced in a year is worth $12,805,000,000. That’s a lot of money, but not an unimaginable amount. For example, that’s about how much the Pentagon spent launching the GPS satellite system. NASA’s budget in 1998 was $13.6 billion. Read More…
The world’s economy is powered by oil. Although coal produces most of the world’s electricity, there are alternatives in electric power generation: nuclear, solar, natural gas, and wind. But the cars and trucks that enable personal transportation, the transport of goods, and the mining of Earth’s raw materials, are all predominately fueled by derivatives of oil – gasoline and diesel.
This is a fundamental fact which investors should always remember. My opinion is that worldwide oil production will have much difficulty keeping up with worldwide demand and that, therefore, the world economy is on an economic yo-yo based on the rise/fall of oil prices. Stephen Leeb describes this in great detail in his wonderful must-read book The Oil Factor. Leeb has even developed a stock market indicator based on changes in oil prices. Read More…
In these days of unpredictable economic stability and high cost of living, more and more people are struggling to find ways to secure their finances. Luckily, among other industry, gold trading is not affected by the economy and it made more and more people getting involved in gold trade. In fact, most investors are now investing more on gold than any other financial investment like treasury bonds, stocks, etc. Why is it so? – Perhaps because almost all modern gadgets that the whole world depends on these days make use of gold. And considering the fact that these gadgets quickly becomes obsolete due to rapid product development, this means a lot of these items are thrown away on almost daily basis. This is a good opportunity to make an alternative business in your own backyard!
The dollar is down, gold goes up. This is particularly confusing phenomenon to those folks who still think that the American dollar is backed by gold. It isn’t. At one time every U.S. dollar in circulation was backed by gold, but today the U.S. dollar is backed only by the so-called “full faith and credit” of the United States.
The Bretton Woods Agreement
Following World War II, a system much like the Gold Standard was established under the Bretton Woods Agreement. The system allowed for many countries to fix their exchange rates relative to the dollar. Under the agreement, the U.S. promised to establish the price of gold at thirty-five dollars an ounce. All currencies that were pegged to the U.S. dollar had a fixed value that was determined by gold. Because of this agreement, the U.S. dollar was accepted in nearly every corner of the globe. The dollar held value everywhere. After all, you could exchange it for its value in gold. (That is, if you were a foreigner. Citizens of the U.S. weren’t allowed to own gold between the years of 1933 and 1974). Read More…
The struggling U.S. Dollar, inflation fears, strong demand for
commodities in general, and interest in “safe haven”
investments have propelled gold and other precious metals
to prices not seen in decades. Where gold will go from here
remains unclear, but one thing is for certain: it remains the
ultimate hedge and world‟s reserve currency.
During the last major gold bull market – precipitated by the
Iran hostage crisis in the late 1970‟s – serious geopolitical
tensions and the prospect of runaway global inflation played
major roles in gold‟s rise from $300 per ounce to $850 per
ounce. As current prices flirt with the $1,000 plateau,
some analysts are beginning to believe that the all-time inflation adjusted peak of $2,450 may not be out of the question. Read More…
There is nothing new happening under the sun. What has already happened will happen again, as the world goes through the same cycle over and over again. If you want to know the future, look at the past to get a better picture.
When it comes to economics, the same truth holds good here too. World economy goes through a pattern which repeats itself endlessly. This is not because there is no other way to go. The cycles can be broken if people take the trouble to rectify the mistakes that have been made in the past and avoid them in the future. However, that never happens due to a fundamental reason – human nature!
We are in the current economic condition that we are in because of the irresponsible way in which we have managed our money. Large banks, corporations, politicians and decision makers have made huge blunders that have landed us in the mess that we find ourselves in today. Read More…
Just as the price of any other commodity would, that of gold constantly fluctuates. For those who plan to invest in gold, their primary concern will be on what triggers the constant price change in gold. The price of gold is something that is determined by the Gold Fix or what is also known as the London Gold Fixing. Via teleconferencing, between five international members of this council, the price of gold is set everyday at around 1030 GMT and once again at 1500 GMT. These determine the international price.
One of the key reasons for the change in prices is the supply and demand factor. Of late there has been a rather high demand for the precious metal from countries such as China and India as well as Russia. There is a preference for it over the American dollar. This past year, the central bank of Mexico invested in 100 tons of gold bullion and as of this current quarter China has already invested in 200 tons of gold imports versus the 260 tons it brought in for the whole of 2010. Read More…
For investors who are doing so for the first time – investing in a commodity like gold can be quite confusing considering that its prices change on a daily basis. So what is it that regulates and causes the price of gold to change to this extent? Being able to understand the functioning of the market will help you make better investments and profit from them as well.
Gold, just like any other commodity is driven by the forces of supply and demand. But what gives gold an added advantage is that it is something that people hoard in the time of crisis and because of its high liquidation, its effect on prices is constant. Also it is a fact that most of the gold that has been mined so far is still in trade. When the markets are ripe, you will see a massive influx of stored gold coming up for sale.
Another factor influencing prices is the way banks manage the gold that they have. Central Banks control approximately 19% of the world’s gold and this is a massive amount that is stored away. How banks manage their gold will determine prices, since they do control a significant amount of the substance. Read More…
After gaining ten percent last year, gold prices are well-positioned to increase 21 percent this year, extending the bull run to a 12 consecutive year period. As investors hoard the precious metal, central banks are increasing their reserves for the first time in many years. The rally started in 2001 and is currently the longest running since 1920 within London. Several global events have led demand to increase and the trend is expected to continue through the end of the year.
The Bloomberg Link Precious Metals Conference was held in New York yesterday and fourteen attendees responded to a survey issued at the event. Based on the average of their responses, prices for golden bullion may increase to $1,897 per ounce by Dec. 31 in New York. At the end of last year, the price stood at $1,566.80 per ounce. The European debt crisis, slowed economic growth in China, and low interest rates around the globe are increasing demand. Read More…
By Dominic Frisby Mar 14, 2012
I’m not unduly worried about the gold price.
But when I saw it had dropped $40 yesterday from $1,700 an ounce to almost $1,660 in the space of just a few hours, I’ll admit a concerned eyebrow was raised.
So I suppose a bit of hand-holding is in order today – even if it’s only my own.
Gold may not see fresh highs for at least another year
Let me start by re-visiting my forecast of several months back. By my reckoning, we wouldn’t see new highs in gold for at least another year, ie not before autumn 2012, if not later. Read More…