Why Is The Gold Price Falling And Where Is It Going Next?

The gold standard refers to a monetary system in which the fixed amount of gold is used to define the value of country's currency and the country's currency is freely interchangeable to gold. To guarantee convertibility, the supply of money issued by the central back was entirely restricted by the quantity of gold reserves in the nation. International payments are compensated in term of gold. Under the gold standard system, the value of a fixed quantity of gold reflects the value of the country's currency, thus leading to a fixed exchange rate, which is determined by the gold weights. For instance, if the gold price in the United State is $400 per an ounce, the dollar’s value will be 1/400 for an ounce of gold. As a result, the government needs

“A weak currency is the sign of a weak economy, and a weak economy leads to a weak nation.” – Ross Perot. The words of the 1992 Presidential candidate still ring true today, and in fact they have since the abolition of the gold standard in 1971 by President Nixon. Ever since that warm August day the United States has been on a death plunge into immaculate amounts of debt. However, by the establishment of the silver standard in the way I will explain to you today, makes it clear that action on such a policy must be taken.

The financial crisis of 2008 has been described as the worst financial crisis the world has seen since the great depression, but there are now murmurings of the potential for an even greater financial crisis, a currency crisis, caused by the demise of the US Dollar. The Dollar has been the reserve currency of the world since it took over from the Pound at the end of world war two, but we examine if it is about to crash spectacularly?

Historically speaking, many investors end up adding gold to their portfolio when all the drama, anxiety and hype has driven gold to blimpish levels from which it can drop precipitously and languish for years. For example, the last time when gold reached a fever pitch was back in the fall of 2011, when the debt problems of Greece, Italy and Spain concern about Eurozone debt overall dominated the headlines. In fact, gold appeared full of promise back then, zooming from just under $1,400 an ounce at the beginning of 2011 to nearly $1,900 by early September for a gain of more than 36% in less than nine months. But as the worries of a Euro debt meltdown faded, so did the price of gold, eventually retreating to less than $1,100 an ounce by the end of last

The first discussion about returning to a Gold Standard is about the necessity of gold. Gold itself is a fairly scarce mineral throughout the world in the first place. The mount of gold that can be purchased by a country is even less. How does this effect a Gold Standard? To those who argue that a Gold Standard is needed, being able to keep a constant level of gold creates more stability for the U.S. dollar. Kimberly Amadeo, an author of “The Balance,” writes,

The American people believed that the U.S. Government would make good on their credit by buying back the greenbacks with Gold.

There will be some change in economy in nationwide. Most people will buy golds to save their money, they think gold is more secure than banks. Bank industry

First, the downward pressure on prices has been exacerbated by a problem of oversupply, as Australian miners produced over 650 million tonnes of iron ore in 2014 (Powell, 2015). While increased production is often indicative of a growing, rather than faltering, industry, in fact prices are so low that only two companies - BHP and Rio Tinto - are able to make a profit (Ker, 2015). Smaller companies, which do not benefit from economies of scale, are unable to meet their production costs. Additionally, another important factor that suggests a pessimistic outlook for iron ore exports in the short-term is the reduced demand from foreign steel mills, especially in China (Powell, 2015). This is indicative of China’s slowing economic growth, as well as its broader shift to consumer-lead growth as opposed to industrial production (Regan and Lian, 2015). Furthermore, while China’s economy has struggled for the past few years, it is currently in the midst of a financial crisis that is especially troubling for the price of iron ore in the near future (The Economist,

In the year 2008, the prices of gold fell down to $9oo from $1,035. This was a drastic downfall in the price of gold in 2008 and this has directly affected investors in a number of ways. The investors suffered losses of large margin and in addition to this, many of the investors had paid from ten to fifty percent of the deposits of their shares and when a downfall occurred in the prices of gold, many of the investors lost almost whole amount of their capital. Beside this, the fall in the prices of gold was less as compared to other equities and commodities (Bohm, 2011, pg 34-39).

Set out what happened to the price of gold in 2008 and 2009. Discuss the factors that might have led to changes in the price of gold in 2008 and 2009.

Despite the recent rally, which was caused by the uncertainty in the stock market and the rising risk of a currency crisis in various countries, the supply and demand economics suggest the gold could decline from $1240 to $900 or less per ounce by the end of 2018. Gold is usually inversely correlated to the stock market and this explains the recent excellent performance of the gold. However, this recent spike can be a trap for investors. One of the largest asset managers on Wall Street, recently, placed about 20% of their asset portfolio in gold and several investors are following in his footsteps. This is such a highly speculative trade. In our opinion gold should not exceed 5% any asset portfolio. I

Gold has been one of the valuable desires for the past thousands years. Its rarity, indestructibility and malleability, enabled it to be the main interest to both, the individuals and businesses. As a result of these properties, the exploration of gold has been of central significance .The intention of this study is expand on many of the theories and notions concerning supply and demand factors influencing the physical gold market.

Since from the calculations, there is a difference between the future price and the future spot parity it is an indication that there is an arbitrage opportunity for the future prices of the gold. Thus, the table above is a presentation of what can be done to take care of the arbitrage opportunity.

Under the classical gold standard, from 1870 to 1914, the international monetary system was largely decentralized and market-based. There was minimal institutional support, apart from the joint commitment of the major economies to maintain the gold price of their currencies. Although the adjustment to external imbalances should, in theory, have been relatively smooth, in practice it was not problem-free.4 Surplus countries

The prices of gold and the US dollar share different relationships in different circumstances. Gold is considered to be a hedge against inflation, recession, and other times of uncertainties, especially due to its high demand and finite supply. This precious metal was, for a long time in history, used as currency, and is still a safe haven for investors. Consequently, most central banks around the world invest more in gold to preserve their assets during volatile economic conditions. On the other hand, the US dollar is widely accepted as an instrument of the global currency exchange. Hence, most central banks also invest their funds in the US dollar. Indian gold prices have increased almost in the last few years, though there was one large correction in between gold and the dollar against rupees in 2010. From the beginning of July 2011 the pace of increase in gold prices has, however, accelerated the impact of the Indian gold prices is reflected in its domestic prices as well dollar’s value. Despite the sharp recent price rise, in India, demand for