Description
This is a presentation describes the price discovery of gold.
PRICE DISCOVERY OF GOLD
ABOUT GOLD
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?
The existence of Gold since 4000 BC Gold is valued as a global currency, a commodity, an investment and simply as an object of beauty Gold has been coveted throughout history for its beauty, scarcity, malleability, and uncanny resistance to rust and corrosion Gold’s unique combination of properties its sun-like color, its soft hardness, its imperviousness to decay is responsible to make gold as the currency of choice for much of the world’s population. The value of gold has transcended all national, political, and cultural borders, making it the ideal currency.
CHARACTERISTICS OF GOLD
It is both a commodity and also monetary asset ? Gold is also scarce enough to make it highly valuable ? There is no true consumption of gold in the economic sense as the stock of gold remains essentially constant while ownership shifts from one party to another ? Gold possesses also to a high degree the physical characteristics of a good money
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CHARACTERISTICS OF GOLD
Gold wears well in coins, though it is best preserved by molding it in the form of bars ? Gold is also divisible and no change in its shape or form affects its value ? Melting, rolling, or pounding has no effect whatever on the value of fine gold
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GLOBAL GOLD MARKET
Total above ground stocks of gold is estimated to be around 1,63,000 tones ? Out of this total stock, 51% is estimated to be present as jewellery, 18% as official reserves, 17% held as investment, 12% used for industrial purposes and 2% is unaccounted for ? Total global mine production is relatively stable, averaging approximately 2,455 tonnes per year
?
GLOBAL GOLD MARKET
India, China, USA, Turkey, Saudi Arabia and UAE account for above 60% of gold demand ? South Africa has been a major gold producer since 1880s and it has produced about 50% of the total gold produced. ? China overtook South Africa as largest producer of Gold in 2007
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GLOBAL GOLD MARKETS
Major Gold markets are: i. OTC markets at London (LBMA), New York and Zurich ii. Gold derivative exchanges at New York – CME (COMEX) iii. Tokyo (TOCOM) iv. Mumbai (MCX) v. Istanbul, Dubai, Hong Kong and Singapore
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INDIAN GOLD MARKET
? ? ? ? ?
India is largest consumer of Gold with 25% of total world’s Gold Total purchase of Gold by India is around 700 to 750 tones per year. India’s own production of Gold is very less hence it depends heavily on imports India is also the largest importer of Gold in the world Facilities for refining, assaying, making them into standard bars, coins in India, are insignificant, both qualitatively and quantitatively
INDIAN GOLD MARKET
India’s Gold demand is embedded upon cultural and religious traditions. ? Gold is 2nd preferred investment after bank deposits ? Indian society has Gold hoarding tendency and unofficial stocks held by Indians is estimated to be well above 15,000 tones ? Domestic consumption is dictated by monsoon, harvest and marriage season
?
GOLD PRICING
Historically gold prices were determined by a combination of political and economical factors ? Later on the concepts of London and American Gold price were institutionalized ? The result of this was Washington agreement
?
GOLD PRICING
? ?
?
?
The price of gold is set by the Gold Fixing. This is a meeting of five members of the London Gold Pool that is conducted twice a day by telephone, at 10:30 GMT and 15:00 GMT The purpose of the Gold Fixing is to settle contracts between members of the London bullion market Gold Fixing is widely recognized as the benchmark used to price gold and gold products throughout the world
FACTORS AFFECTING GOLD PRICES
The price of Gold is driven by the demand and supply ? Hoarding and disposal plays a bigger role in affecting the price ? Price of Gold is mainly affected by change in sentiments rather than change in the annual production
?
FACTORS AFFECTING GOLD PRICES
Following are the major factors affecting the Gold prices: 1. US Dollar exchange rate 2. Growth in demand for jewelry 3. Increase in demand for exchange traded products
?
FACTORS AFFECTING GOLD PRICES
Other Factors: 1. National level crisis 2. Real estate market 3. Bank failures
?
THANK YOU!
doc_319998835.pptx
This is a presentation describes the price discovery of gold.
PRICE DISCOVERY OF GOLD
ABOUT GOLD
? ? ?
?
The existence of Gold since 4000 BC Gold is valued as a global currency, a commodity, an investment and simply as an object of beauty Gold has been coveted throughout history for its beauty, scarcity, malleability, and uncanny resistance to rust and corrosion Gold’s unique combination of properties its sun-like color, its soft hardness, its imperviousness to decay is responsible to make gold as the currency of choice for much of the world’s population. The value of gold has transcended all national, political, and cultural borders, making it the ideal currency.
CHARACTERISTICS OF GOLD
It is both a commodity and also monetary asset ? Gold is also scarce enough to make it highly valuable ? There is no true consumption of gold in the economic sense as the stock of gold remains essentially constant while ownership shifts from one party to another ? Gold possesses also to a high degree the physical characteristics of a good money
?
CHARACTERISTICS OF GOLD
Gold wears well in coins, though it is best preserved by molding it in the form of bars ? Gold is also divisible and no change in its shape or form affects its value ? Melting, rolling, or pounding has no effect whatever on the value of fine gold
?
GLOBAL GOLD MARKET
Total above ground stocks of gold is estimated to be around 1,63,000 tones ? Out of this total stock, 51% is estimated to be present as jewellery, 18% as official reserves, 17% held as investment, 12% used for industrial purposes and 2% is unaccounted for ? Total global mine production is relatively stable, averaging approximately 2,455 tonnes per year
?
GLOBAL GOLD MARKET
India, China, USA, Turkey, Saudi Arabia and UAE account for above 60% of gold demand ? South Africa has been a major gold producer since 1880s and it has produced about 50% of the total gold produced. ? China overtook South Africa as largest producer of Gold in 2007
?
GLOBAL GOLD MARKETS
Major Gold markets are: i. OTC markets at London (LBMA), New York and Zurich ii. Gold derivative exchanges at New York – CME (COMEX) iii. Tokyo (TOCOM) iv. Mumbai (MCX) v. Istanbul, Dubai, Hong Kong and Singapore
?
INDIAN GOLD MARKET
? ? ? ? ?
India is largest consumer of Gold with 25% of total world’s Gold Total purchase of Gold by India is around 700 to 750 tones per year. India’s own production of Gold is very less hence it depends heavily on imports India is also the largest importer of Gold in the world Facilities for refining, assaying, making them into standard bars, coins in India, are insignificant, both qualitatively and quantitatively
INDIAN GOLD MARKET
India’s Gold demand is embedded upon cultural and religious traditions. ? Gold is 2nd preferred investment after bank deposits ? Indian society has Gold hoarding tendency and unofficial stocks held by Indians is estimated to be well above 15,000 tones ? Domestic consumption is dictated by monsoon, harvest and marriage season
?
GOLD PRICING
Historically gold prices were determined by a combination of political and economical factors ? Later on the concepts of London and American Gold price were institutionalized ? The result of this was Washington agreement
?
GOLD PRICING
? ?
?
?
The price of gold is set by the Gold Fixing. This is a meeting of five members of the London Gold Pool that is conducted twice a day by telephone, at 10:30 GMT and 15:00 GMT The purpose of the Gold Fixing is to settle contracts between members of the London bullion market Gold Fixing is widely recognized as the benchmark used to price gold and gold products throughout the world
FACTORS AFFECTING GOLD PRICES
The price of Gold is driven by the demand and supply ? Hoarding and disposal plays a bigger role in affecting the price ? Price of Gold is mainly affected by change in sentiments rather than change in the annual production
?
FACTORS AFFECTING GOLD PRICES
Following are the major factors affecting the Gold prices: 1. US Dollar exchange rate 2. Growth in demand for jewelry 3. Increase in demand for exchange traded products
?
FACTORS AFFECTING GOLD PRICES
Other Factors: 1. National level crisis 2. Real estate market 3. Bank failures
?
THANK YOU!
doc_319998835.pptx