| Gold
has been desired throughout the history of our
planet by almost every established culture as
the ultimate symbol of power, wealth, beauty,
and accomplishment. Because gold is highly valued
and in very limited supply it has been used as
money for more than 6,000 years.
Gold's
luster and brilliance occupies a special place
in the human mind. Generally, people refer their
loved and respected ones with this Yellow Metallic
name like Golden Man, Golden Girl, Golden Heart,
while the course of events have been referred
to by them all as Golden Chance and Golden Opportunity.
This shows how people irrespective of their culture
and nationality, regard gold as a part and parcel
of their lives. Empires and Kingdoms rose and
fell throughout the history for want of Gold,
and in the quest of Gold. The Gold has always
been its own value. It is the most ancient form
of money still used today. No other rare metal
holds a more visible and prominent place in our
society.
Gradually but progressively, Gold once again is
proven to be the only viable alternative to the
fragile and flawed currency reserves of the world.
Gold is internationally, a stabilizing factor
in protecting the monetary interest of nations.
With the implications of flexible debt based paper,
monetary systems and related political consequences,
the reintroduction of Gold currency can be expected.
The Islamic Dinar is a recently created 100% gold
currency that is striving to become the currency
of more than one billion Muslims.
In the midst of a Global currency devaluation
scenario, one can't help but notice that while
oil is supreme in the commodities arena; Gold
reigns in the monetary system and has enjoyed
this unique esteem for years. Gold is strategic
in the protection of currency stability.
The seemingly hidden link between Oil and Gold
is undeniable. Preferring tangible assets, the
oil producing nations of the Middle East, understand
that Gold is unmistakably the true international
currency. The realization, nay consensus that
these oil exporting nations are trading in an
increasingly diminishing and valuable product,
where production might not be able to keep up
with demand by 2010, for deficit prone paper currency
is becoming more evident.
Historically, the value of national currencies
may rise and fall but the value of gold remains
remarkably stable. Gold fulfils the function of
money and is accepted worldwide as a form of payment.
Gold
can be readily bought or sold 24-hours a day in
one or more markets around the world. Gold offers
secure value and is easy to invest. Gold is the
most liquid asset.
PRODUCTION OF GOLD AND ITS DEMAND-SUPPLY
Did you know that gold is used in almost every
sophisticated electronic device? From calculators,
PDA's, GPS devices, home audios, TV's, satellites,
automobiles, to every computer on the planet!
Even a mobile phone can contain about 50 cents
(USD) in gold. As the world becomes more technology
driven, the demand for gold in technology is increasing
rapidly. It is truly the amazing metal of the
future.
Only 50-80 grams of gold is found in 1 tonne of
mined ore. Finding and mining gold is extremely
difficult, complex, and expensive.
New mines often take 10 years and billions of
dollars of infrastructure to begin contributing
to supply. Miners cannot increase supply even
when prices are high.
Annual gold production has not increased over
the last 10 years averaging about 2,500 metric
tons per year. In fact, it has actually gone down
since 2003. New mines that are being developed
will replace current production rather than expand
gold supply. At current consumption rates, the
supply of gold is believed to last as little as
27 years. Consumption will increase in a high-tech
world.
Supply is further constrained because some gold
is simply discarded and not recycled. Billions
of mobile phones, computers, and electronic devices
in use worldwide will become obsolete every few
years. Each microchip contains a small amount
of gold that is often not recovered because the
cost of recycling is not worthwhile.
Imagine 3 billion mobile phones with 50 U.S. cents
of gold in each phone. There are more than 40,000
kilos of gold in mobile phones worth more than
1.5 billion U.S. dollars. 20% of all mined gold
is in the national reserve of the governments
around the world. It is generally not intended
for sale to the open market. This gold is essentially
removed from the open market supply.
Gold supply is not going to increase enough to
make a difference. The trend price of gold must
rise.
Is Gold Too Expensive ?
53% of world gold demand is attributable to just
five countries - India, China, USA, Italy, Turkey.
India alone accounts for 22%. Rapidly rising prosperity
in India, China, and the Middle East over the
next century undoubtedly will raise the price
of gold.
From time immemorial, these cultures have been
in love with gold. There will be increased sales
of jewelry, investments, and technology such as
mobile phones. Furthermore, rising inflation in
these countries will lead to investment in gold
as a form of protection from inflation.
Electronics uses for gold will raise industrial
demand by 50% in a decade.
Our Golden Future :
More gold is used today than at any time in the
history of mankind. Cultures worldwide revere
gold's exquisite beauty in the form of jewelry,
medals, and religious importance.
Individuals buy gold as a method of safe savings.
Corporations consume gold in massive quantities
to improve technology. Governments store gold
as an indestructible core asset representing the
nation's wealth. Investors are flocking to gold
in both booming and uncertain times. In today's
world it is virtually impossible to pass a day
without coming into contact with how gold plays
an important part in your world.
 |
History
Of Gold Prices
(In Rupees) |
| 1930:
|
180 |
per
10 gram |
1940: |
360
|
per
10 gram |
1950: |
1000 |
per
10 gram |
1960: |
1110 |
per
10 gram |
1970:
|
1840 |
per
10 gram |
1975:
|
5,400
|
per
10 gram |
2000:
|
3,000
|
per
10 gram |
2006:
|
5,400 |
per
10 gram |
2009:
|
15,700 |
per
10 gram |
|
Gold
surprisingly gave 300% returns from 1970 to 1975
when world suffered worst ever recession after
great Depression. Will the history repeat? That
is the reason behind current "Mad Gold rush".
But if you invested in the Gold in 1975, your
investment gave negative returns for the next
25 years.
Remember
2 things:
1. Gold generally trades in the lower range around
March and July. Generally, it is the best time
to buy gold and marriage season is the best time
to sell God.
2.
Below 11,000, Gold is a safe investment but above
15,000- it is only for traders but not for investors.
Future
of Gold:
When stock markets are in down turn in 2002, Gold
was at Rs 5,400 per 10 gram. Don't forget that
Gold traded below 9,000 per 10 gram till 2007
means you might have got routine returns from
Gold investment. But investors who made investments
in gold in mid-2007 are now making 70% returns
in just 20 months. But I don't know what will
happen to gold investors who bought it at above
15,000 but they remain in losses even after 3
years. Why? Gold will recede to 11,000 levels
once equities make comeback. What happened to
crude oil will repeat in case of gold also. Don't
forget that Gold is not even an essential commodity.
But Gold is a less volatile investment.
Examples:
1. Crude oil prices moved to $147 per barrel and
Goldman Sachs people gave $200 per barrel target.
It is now trading below the fundamental price
at $35 per barrel.
2.
Sensex moved to 21,000 and analysts and analysts
gave 30,000 target. It is now trading at 9,000
levels.
3.
Real Estate prices reached astronomical levels
in 2007 but people bought land as if there will
be no land available for purchase in future. |
