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Investing in Gold2
Gold as an investment and how the market affects gold price.
Investing in Gold<a href=http://www.goldcoinsgain.com>Gold</a> is the most popular precious metal inwhich people invest. It is a safe-haven agaainst any economic, political, social or currency-based crises, such as: investment market declines, currency failure, inflation,war and social unrest.Influence on <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>gold price</a>:The day <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>price of gold</a> is driven by supply anddemand. Because most of the gold ever mined still exists and is potentially able to comeon to the market for the right price, unlike most other commodities, the hoarding anddisposal plays a much bigger role in affecting the price. At the end of 2006, it wasestimated that all the<a href=http://www.goldcoinsgain.com>gold</a> ever minedtotaled 158,000 tons.Given the huge quantity of stored gold, compared to the annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production.In times of national crisis, people fear that their assets may be seized and that thecurrency may become worthless. They see <ahref=http://www.goldcoinsgain.com>gold</a> as a solid asset which will always buyfood or transportation. Thus in times of great uncertainty, particularly when war is feared,the demand for gold rises.When dollars were fully convertible into gold, 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 mighthave been the result. This is what happened in the USA during the Great Depression of the 1930s, leading President Roosevelt to impose a national emergency and to outlaw theownership of gold by US citizens.If the return on bonds, equities and real estate is not adequately compensating for risk andinflation then the demand for <a href=http://www.goldcoinsgain.com>gold</a> and other alternative investments such as commodities increases. An example of this is the periodof Stagflation that occurred during the 1970s and which led to an economic bubbleforming in precious metals.The system held up until 1971 Nixon Shock, when the US stopped the directconvertibility of the United States dollar to gold. Since 1968 the usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily (telephone) meeting of representatives from five bullion-trading firms. Furthermore, there is active gold trading based on the intra-day <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>spot price</a> derived fromgold-trading markets around the world as they open and close throughout the day.
Throughout history gold has often been used as money and, instead of quoting the <ahref=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>gold price</a> , all other commodities were measuredin gold. After World War II a gold standard was established following the 1946 BrettonWoods conference, fixing the <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>gold price</a> at $35 per troy ounce.The Gold Fixing, or the London Gold Fixing or Gold Fix, is the procedure by which the<a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>price of gold</a> price of gold is set on theLondon market by the five members of the London Gold Pool. It is designed to fix a pricefor settling contracts between members of the London bullion market, but, informally, theGold Fixing provides a recognized rate that is used as a benchmark for pricing themajority of gold products throughout the world's markets.The <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>gold price</a> fix takes place twice dailyat 10.30am and 3pm, London time.The first fixing took place on September 12, 1919 amongst the five principal gold bulliontraders and refiners of the day. The <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>price of gold</a> then was four pounds 18 shillings and ninepence per troy ounce.Due to government controls and war emergencies, the London Gold Fixing wassuspended between 1939 and 1954.<a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>price of gold</a> are fixed in United Statesdollars (USD), Pound sterling (GBP) and European Euros (EUR).Historically, the Fixing took place twice daily at the City offices of N M Rothschild &Sons in St Swithin's Lane, but since May 5 2004 it takes place by telephone. In April2004, N M Rothschild & Sons announced that it planned to withdraw from gold tradingand from the London Gold Fixing. Barclays Bank took its place from 7 June 2004, andthe chairmanship of the meeting, formerly held permanently by Rothschilds, now rotatesannually.On January 21 1980 the Gold Fixing reached the price of $850, a figure which was notovertaken until January 3 2008. This is when a new record of $865.35 per troy ounce wasset in the morning Fixing. However, with inflation, the 1980 high would be equal to a price of $2398.21 in 2007 dollars. So, the 1980 record still holds in real terms.While gold is traded in markets throughout the world, the market is essentiallyhomogenous since the <a href=http://www.goldcoinsgain.com/Gold-Prices-Gold-Price-Price-of-Gold-Gold-Spot-Current-Gold-Prices-Gold-Charts/>gold price</a> is always indollars and the gold traded is "loco London" (gold deliverable in London and meetingLondon trading standards). The London PM fix is normally considered the mainreference price for the day and is the price most often used in contracts. The <a
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Investing in Gold2
Gold as an investment and how the market affects
gold price.
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| Upload Date: | 11/11/2009 |
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