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Gold as an investment
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest. Investors also buy gold early in a bull market and sell it before a bear market begins, in an attempt to gain financially.
For thousands of years, gold has been valued as a global currency, a commodity, an investment and simply an object of beauty. As financial markets developed rapidly during the 1980s and 1990s, gold receded into the background and many investors lost touch with this asset of last resort. Recent years have seen a striking increase in investor interest in gold. While a sustained price rally, underpinned by the fact that demand consistently outstrips supply, is clearly a positive factor in this resurgence, there are many reasons why people and institutions around the world are once again investing in gold.
Market Fundamentals
Gold's extensive appeal and functionality, including its characteristics as an investment vehicle, are underpinned by the supply and demand dynamics of the gold market.
World Gold Council Investment Research
The World Gold Council is an international not-for-profit organisation. Head-quartered in London, we have regional offices in India, China, Japan, the Middle East, Turkey and North America. Our investment research programme provides investors around the world with key information about gold.This includes the publication of a wide range of research papers - by acknowledged academics and our own in-house experts alike - looking at gold's investment characteristics, as well as a wealth of information on the structure of the market, demand and supply flows and regular updates on gold market statistics.
History of gold
From the first discoveries of gold in ancient times, its beauty and the ease with which it could be worked have inspired craftsmen to use it to create ornaments, not just for adornment, but as potent symbols of wealth and power. The first pure gold coins were struck by King Croesus of Lydia (present-day Turkey) during his reign between 560 and 547 BC and gold coins have continued as legal tender since that time.
Mine production
It is known that the Egyptians mined gold before 2000 BC and the first coin containing gold was struck in the eighth century BC.The best estimates available suggest that the total volume of gold mined over history is approximately 158,000 tonnes, of which around 65% has been mined since 1950. Production has been on a downward trend since 2001, due principally to the reduction in exploration budgets that accompanied the low gold price of the late 1990s and the consequent fall in the number of major new gold discoveries. Independent analysts believe mine output will remain relatively flat for the next few years. For a history of gold mining.
Gold as a reserve asset
Central banks have been major holders of gold for more than 100 years and are expected to retain large stocks in future. They currently account for about 20% of above-ground stocks. The process of rebalancing reserve portfolios to adjust to changing conditions since the demise of the gold standard has led to a reduction in the amount of gold held by some central banks in the past ten years. This process may continue for some years to come. But the central banks have affirmed that gold will remain an important reserve asset for the foreseeable future and, importantly, since 1999 have accepted that sales be governed by international agreement.
Daily gold prices in various currencies vailable at:
http://www.research.gold.org/prices/
More information available at:
http://www.invest.gold.org/ |
