Gold Price and Its Importance For
The World Economy
Gold is the most popular precious metal, recognised and respected by most everyone in the world today. Throughout history gold was sought after by every civilisation.It was used as money, in jewellery, as well as an industrial material, but most recently as a very popular investment product.
The Gold price is volatile. It has experienced many fluctuations but one thing is for certain – the gold price has continued to rise consistently. For example, the lowest price of gold in the last 15 years was in 2000, only 274.5 US dollars per ounce. Nowadays, in 2014 it sits at around 1300 US dollars per ounce. It’s price is influenced by many factors, for example, basic economic regulations – supply and demand, including demand through speculation. It is also determined by the measures and actions of central banks, the International Monetary Fund (IMF), the value of the US dollar, the general state of the global economy, and on occasion, it is determined by emergency situations in a country, such as war or invasion.
In order to prevent manipulations, gold exchange markets are supervised by governmental and self-regulating organizations. There are four important gold exchange markets in the world. We have the London Gold Market (London Bullion Market Association, abbreviated as LBMA ), American Gold Market (CME Group or COMEX), Zurich Gold Market (controlled by three banks – UBS, Credit Suisse and Union Bank of Switzerland) and Hong Kong Gold Market (Chinese Gold and Silver Exchange Society, abbreviated as CGSE). The Japanese gold market (Tokyo Commodity Exchange, abbreviated as TOCOM) is also very important. By connecting these markets, gold trading can be achieved within 24 hours through the worldwide network.
The major producers and consumption
South Africa used to be the world’s dominant gold producer before 2006. It was followed by the USA, China, Australia, and Peru. Recently, other countries with a greater land surface areas have overtaken South Africa considerably. Since 2007, China has become the largest gold producing country in the world, followed by Australia, USA, Russia, and Peru. South Africa is currently in the sixth position. China has also dominated the figures of gold importation generally – 130 tonnes in March 2013, although a reduction of 27% in these figures was seen between February and March 2014. According to Gold Fields Mineral Services, abbreviated as GFMS (a leading independent precious metals consultancy specialised in global gold, silver, platinum and palladium market research, formed in 1989), only a total of 174,100 tonnes of gold has been mined in human history.
Currently, the world consumption of produced gold is about 50% in jewellery, 40% in investments, and 10% in industry. In industry, gold is commonly used in electronics, dentistry, commercial chemistry and other fields. Its characteristics of high malleability, ductility, flexibility, resistance to corrosion and most chemical reactions, and conductivity of electricity have led to many more uses, including coloured-glass production and electrical wiring.
Historically, gold has always been an excellent way to store wealth and secure purchasing power for long periods of time. Mankind has had a strong affinity with this precious metal, and it makes sense to take advantage of the many benefits that gold has to offer.
By Lisa Casagrande | https://www.goldbullionaustralia.com.au