investment gold and siler by aishaaminudin

VIEWS: 3 PAGES: 2

More Info
									What reasons, what the gold norm goes upwards and downwards? First, the personnel and
industrial demand; the second influences by the central banks and the main companies of a mining
industry; the third speculators and dealers; and at last a military and national emergency.



1. The personnel and Industrial demand



The biggest factor influencing gold norm - the requirement of jewelry which consume two thirds of
annual gold manufacture. Here, India brings 27 % in the requirement. India has long history of
affinity to jewelry of this precious metal. China removes its restrictions to possess gold. It in addition
brings up the requirement of gold.



Industrial demand makes approximately 12 % of the gold requirement. It includes uses in medicine.
Gold - a favourite material in the industry as it has high thermal conductivity and high resistance of
corrosion. The requirement of jewelry and industrial increases for these years as the population
grows. The further increase of the gold requirement arrives from appearing markets (India, China,
the Near East, etc.) which became more industrial the enterprise and its citizens more richly.



2. The central banks



Participants of the market with greater gold reserves, type of the central banks and the extracting
companies can influence the gold price considerably. To reduce a level of the gold price, gold is sold
(to cause short sales). To increase the price, gold or it is sold, or manufacture is strengthened.



However, the central banks keep, less gold reserves than is usually trusted. In 2010 only 16 % of the
made gold possessed the central banks. Further, the Washington Agreement on Gold (SWING), with
1999 places a cap in sales of gold by its members (the United States, Japan, the Europe, Australia,
Bank of the International Settlements and the International currency fund). This agreement limits
sale less than 500 tons annually.



Besides influence on gold norm by means of sale and purchase, the central banks also have authority
above norm, changing interest rates. High interest rates do investments into gold less favorable as
this precious material makes not interests.



3. The assumption and Trade
Certainly, gold not only is in demand for the further processings (industry) or only boasting (jewelry),
but also and for speculative occasions. It is the same as other consumer goods, type of oil, wheat
and copper. Gold can be used, that застраховаться against inflation and devaluation of currencies.
Inflation reduces value of currencies. Thus, gold in a portfolio weakens loss. Besides the price is
negatively correlated to value of US dollar. Value if the dollar is weakened, the gold price, will raise.
More than speculative actions - the future and variants where investors can even benefit by the
falling prices of this precious material.



4. A military and National Emergency



Last factor influencing gold norm - a national emergency and hooks in the government. On the one
hand, military times reduce gold purchases as people have less than the had income, and possibly
other priorities (for example to survive). On the other hand, in such extreme gold of situations could
bring steady value in a portfolio as the national currency, possibly, will suffer. Think of a
hyperinflation in 1920 in the Europe, or a current situation of Zimbabwe. Other problem - dictators
who will nationalize gold mines, limit export or only have stolen deliveries from the central bank.

								
To top