Throughout the history of man gold has been valuable as currency and a resource, and the protection and pursuit of this resource has been marked by blood shed, violence, and war. In the 1980’s and 1990’s gold became a backstage player in the investment world. Recent years and a weak economy has pushed gold back into the relative lime light as a much more secure investment when compared to company stocks and investments. Investor interest fueled a rally for the precious metal and as always the demand for the resource far outweighs the supply keeping prices high. As most major resources have been depleted, or at the very least discovered, the advancing prices show little signs of stopping its upswing in the near or distant future. These facts and characteristics of the gold market define the value and demand for the resource from an investor’s point of view.
World Demand for Gold
Demand for gold presently is relatively evenly spread world wide per capita with the populous East Asian, Indian, and Middle Eastern regions accounts for 70 per cent of the worlds demand. While there are a massive amount of social, economic, and cultural factors that determine demand for many different regions, countries, and industries 55 per cent of demand is initiated by five countries with varied reasons for their demand requirements. These countries include India, Italy, Turkey, the United States, and China and each country produces its own requirements for demand.
Jewelry Industry’s High Demand for Gold
Jewelry accounts for over two thirds of demand of the precious metal and the worth of this high demand of gold is worth an estimated 61 billion dollars which amazingly makes jewelry the most largely demanded consumer good. The United States is the largest retail market for gold jewelry and India is the largest consumer of gold coins in terms of volume, their demand equaling 24 per cent of the gross product. India’s demand is marked by mainly cultural and religious traditions and do not reflect much of global economics.
The pressures of the world recession and economic crisis that came to the forefront of the business and investment world has resulted in reduced demand of jewelry sales, and this rate of decline in demand is particularly associated with western markets of jewelry sales and other non essential gold items. Jewelry demand is driven by combinations of value and desire based on consumer interest. While many emerging markets were building gold demand in their home countries the economic down turn has caused these markets to fall sharply in recent years while several countries, China included among them, offer some potential for future jewelry market growth.
Gold Investment’s Price Setting
While most of demand is determined through over the counter sales as opposed to traditional investments in which prices are commonly determined by stock exchanges and future speculation of prices. Investments in gold amounted to 32 billion dollars yearly. A factor of this large amount of liquid investment in this market is a direct effect of the wide availability of different and emerging ways of investment that fit a wide variety of individual needs and investment strategies. A positive long term outlook combined with growth in demand provides solid reasons to invest in this timeless resource and golds ability to insure against volatile markets and weak economies tends to rebound strongly during periods of market stability and it is recommended that potential investors look to combine there investments in gold through many different investment strategies to ensure gold portfolio diversification and long term, stable rises in investments values.
Technological and Medical Demands for Gold
Industrial, medical, and dental uses amount to over 10 per cent of the current demand for gold. Because of gold’s high thermal abilities and electric conductivity in combination with its amazing ability to resist corrosive forces explains why half of all industrial uses contribute to electrical components. The use of gold in medical equipment are attributed to its resistance to bacterial colonization and its ability to be accepted by the body without rejection. In more recent times there have been advancements new uses for the timeless material including fuel applications, an integral product for chemical processing, and pollution controls derived from its abilities to pull impurities from other sources. The future of electronics, glazing coatings, and cancer treatments have proved exciting areas of scientific research that the use of investing in gold nano particles is advancing.
World Availability of Gold
Gold is available to be mined on every continent besides Antarctica and only because mining in Antarctica is strictly prohibited. Mining operations for the precious resource range from the small artisan level to massive operations that use the latest equipment and techniques to produce amazingly efficient results. In recent years global production has remained relatively stable with new mines being developed as older ones are depleted. New mines take a relatively long time to get streamlined most taking ten years to become fully automated. Because mining output is difficult to raise in any substantial way the amount or output of mines. Fluctuations in price then are not so much directed by production as demand which is much more prone to change than supply and thus has a better handle of price.
Recycled Gold as a Supply Stabilizer
Recycled gold keeps global supply in check ensuring there is an easily exchangeable source to meet global demand and this form is the most economically viable source to be had. Recycled gold accounts for over 25 per cent of annual global supply by melting down, re refining, and reusing the materials to offer more stability to the market value.
Gold Production and Refining
Gold production is divided in six different phases of operation starting with finding the ore body, then creating a way to access the ore, after that removing the ore from the mining area and transporting the ore to a processing plant to be separated and refined and this process applies to both underground mining where an entry to the source is drilled and then mined from the inside out in addition to surface operations where the ore is mined from the surface and dug out downward.
Gold is an amazing material with a rich and amazing history that will never be out of favor in the investment world. As long as gold glitters so will its reputation as a sound and wise investment. No other commodity can carry the security or dependability of gold and there is no sign of this changing in the near or distant future.
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