Overview of gold

By:Varsha GaitondePalb 2235

Contents • Introduction • History of gold• Value chain of gold• Gold price from last decades• Analysis of price• Reasons

Introduction

• Gold is a comparatively dense, shiny, yellow metal.

• Gold is quite resistant to corrosion (by oxygen, but also many

other chemicals).

• There are medical (dentistry), chemical and industrial

applications of gold.

• However, aside these rather limited applications (for which, in

fact, gold often can be substituted with other materials like

copper, ceramics etc.) the metal is more or less useless.

History of Gold

The history of gold, from 5,000 years ago until 2011, in 9 acts.

1.Ancient History and Classical Era

2. Medieval Times

3. Early Modern Times

4. Classic Gold Standard (1816 – 1914)

5. Interwar Period (1918 – 1939)

6. Bretton Woods System (1944 – 1971)

7. Bull Market: Upward Trend(1971 – 1980)

8. Bear Market: Downward Trend(1980 – 2001)

9. Bull Market: Upward Trend (2001 – )

VALUE CHAIN OF GOLD 

How Gold is Mined

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Exploration Exploration Drilling Blasthole Drilling

Blasting Underground Mining Ore & Waste Haulage

How Gold is Mined

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Heap Leaching Mining Oxidization

Leaching Stripping Electro-winning

How Gold is Mined

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Smelting Gold Bullion Refining

Reclamation

Domestic MarketIndia is the largest consumer of Gold in the world accounting for

nearly 25% of the total gold consumption in the world. Most of

India gold consumption is in the form of jewellery and as

investment demand. Indian gold demand is supported by

cultural and religious traditions which are not directly linked to

global economic trends as a result of which demand remains

steady even during high prices.

International Market

Gold demand in 2010 reached a 10 year high of 3812.2

tonnes. Demand was up 9% year-on-year, and

marginally above the previous peak of 2008 despite a

40% increase in the annual average price level

between 2008 and 2010.

In value terms, total annual gold demand surged 38%

to a record of US$150 billion.

China is currently the largest producer of Gold in the

world having overtaken US in the last couple of years.

Asian consumers led demand with the revival of the Indian

market and strong momentum in Chinese gold demand,

which together constituted 51% of total jewellery and

investment demand during the year 2010

Why do Gold Prices Soar?

• Rising Inflation

• Depletion of Gold

• Excessive Demand

• Gold Speculation

• Wars and Economic Depression

Fluctuations In The Gold Price And Its Relation To Oil Markets

• . The oil market is influenced by developments in currencies, especially dollars, and sometimes can cause developments in the world’s major currency markets. Factors that influence the price of oil are varied and include political issues, the balance of supply and demand, the status of alternative energy sources and the financial markets. However, while oil price changes have a significant impact on world financial markets, they do not have a direct effect on fluctuations in the world gold market.

Risks of Gold1. Physical Risks of Gold

2. Gold Exchange Risks

3. Volatility

4. Political

5. Gold Scams

How the Gold Prices Are Determined ?

• Supply and demand conditions in the long

run,

• Short run due to the physical limitations on

the gold mining and the inelastic

characteristics of the gold production,

changes in the gold prices are more subject

to demand forces

Factors contribute towards the steady rise of the gold rate?

1. First, a reduction of gold supply

2. From 2001 the global gold production falls within a decade by 10%

3. Still, demand in jewelry and by industry continues to increase due to India’s and China’s economic performances

4. Additionally, at the end of the decade central banks began to step up their gold reserves

1. Other important factors are the since 2001 increasing US national debt and the weakening of the US dollar relative to other currencies

2. The financial crisis of 2008, during which the US government nationalized the two biggest US mortgage lenders and the biggest US insurer, drove up demand for physical gold and exchange traded funds

Conti…..

Uses of Gold• Gold is a soft metal usually alloyed in jewellery to give it

more strength, and the term carat describes the amount of gold present (24 carats is pure gold)

• Gold for jewellery can be given a range of hues depending on the metal with which it is alloyed (white, red, blue, green etc.)

• Jewellery consumes around 75% of all gold produced.• Metallic gold is applied as a thin film on the windows of

large buildings to reflect the heat of the Sun's rays• Gold electroplating is used in the electronic industry to

protect their copper components and improve their solder ability.

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How Gold is Traded

• Over the Counter • Between principals, not through exchanges • Contracts terms are flexible• Main centers: London, New York, and Zurich • Mining companies and central banks tend to

transact their business through London and New York • Twice daily during London trading hours there is a

“fix” which offers reference prices for that day’s trading.

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The Settlement Process

• The basis of settlement is delivery of a standard London Good Delivery Bar, at the London vault nominated by the dealer who made the sale. Currency settlement for gold transactions will generally be in US dollars over a US dollar account held in New York.

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Market Dynamics: Gold Prices

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Occasions for buying Gold .• Oman and Pongal in the south, Durga Puja

in the east, and Dhanteras and Dusherra for the north and west• festival of Akshaya Thrithiya, which

usually falls in April, has also become a red-letter day for gold purchases• There are 16 types, including rings,

bangles, necklaces and special pieces for the head, nose, ankles and waist.

Thank YouThank You

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