The debt ceiling impasse of the Government of the United States, the debt crisis in the Euro area and the uncertainty in the global world helped in the propulsion of raw gold, record prices. In Mauritius, gold is bought especially for weddings or special occasions. However, it is increasingly unaffordable for consumers in Mauritius to buy new gold jewelry. Indeed, there has been a surge in sales of jewelry used as consumers, in dire need of money to fund other transactions, are being tempted to dispose of their household wealth in gold. Buyers of second hand jewelry now abound, and this situation has also resulted in an increase in thefts, prompting the Government to consider amending the Act of jewelry to tackle this problem.
The gold market has a wide range of buyers and sellers who have different motivations and react differently to price moves. Some investors buy gold as a strategic asset in the long term, some as an inflation hedge, some as a safe haven and others due to their tactical point of view of the gold market. In various local customs, one cannot neglect the cultural value attached to gold. Mauritius, we use mainly as gold jewelry due to its significant economic and cultural value. However, gold is also used in the manufacturing and in dentistry. In fact, 11% of total gold demand is for these activities. Gold is used in production due to its flexibility, corrosion resistance and to be an excellent conductor of electricity. Most of the electrical and electronic equipment that we use every day contain some percentage of gold.
Used in dentistry
For example, all components of television, DVD players, telephones and computers contain some form of gold. Gold is also used in dentistry because of its composition and also because it is not toxic to the body. In addition, gold is used in medical devices and instruments. Gold has many other uses as well as through the emerging technological breakthrough. According to the World Gold Council and Nanostellar, a developer of advanced materials Silicon Valley, has completed the sale of a gold based catalyst.
The inclusion of gold in this technology offers significant advantages to manufacturers of diesel vehicles, providing emission reductions up to 30%, production cost reductions, or alternatively, improved fuel economy. Catalytic converters in cars and trucks use precious metals to catalyze the oxidation of harmful byproducts in exhaust gas and thus reduce harmful emissions. Gold, due to its unique properties and quality, is also increasingly used in nanotechnology. Nanotechnology, in its simplest definition is an area of scientific development that offers ways of creating devices smaller, less expensive, lighter and faster they can do things better and smarter, use less raw material and consume less energy.
Thus, from these examples, we find that these activities add to the demand for gold and then give value added to the metal. Therefore, the gold is not only the most reliable form of money and but also a long-term protection of wealth and an indispensable raw.
Precious metals are real goods, unlike stocks and bonds, and react differently to changing economic conditions. Commodity prices tend to rise with inflation. Stocks and bonds on the other hand, tend to work better when the inflation rate is stable or slowdown. Metals such as gold and other commodities are not just a hedge against inflation, but also a hedge against destabilizing events or catastrophes. Prices of raw materials increase during periods of crisis such as wars and the stock market crashes. So, gold is an important financial asset to investors. The financial market for gold is extremely robust, allowing market participants to use gold as a store of wealth, a source of investment and a guarantee of high quality. Actually, gold is traded through market operations over the Counter (OTC) and the majority of OTC transactions are undertaken in the London Bullion Market Association. In addition to global trading OTC, there are several gold exchange markets around the world in exchange for gold in Istanbul, Shanghai Gold Exchange and the Hong Kong Gold & Silver Exchange society. As emerging market financial systems become more developed and globalized, these exchanges are likely to witness the additional negotiation and then further demand and hike the price of gold. Closer to us, Global Board of Trade also offers golden opportunities of transactions on the derivatives market.
Preserve the nation's wealth
Gold also plays an important role for Governments and central banks. Central banks gold trade primarily to preserve the national wealth and at the same time use it as an anchor for monetary bases. Central Bank of Mauritius, Mauritius rule gold transactions. Then, we saw that gold is not only used in jewelry, but also for other industrial activities as well. In addition, the trading of gold is done mainly through OTCs and it is also important for central banks. Today, the world price of gold has more than tripled since 2007, where it was trading at less than 600 DOLLARS an ounce. While Bloomberg predicts a 2012 priced at 1,938 USD ounce, other meteorologists like JP Morgan anticipate a future price as high as USD 2,500. Top ten gold-hoarding countries are United States, Germany, Italy, France, China, Switzerland, Japan, Netherlands and Russia. India is among the top 20. Many countries have invested heavily in gold reserves over the past five years. Emerging countries such as Mexico, Thailand and South Korea are turning now to gold the Bank against the debt crisis. Despite the high price of electricity, many feel that it's still not too late to climb toward the gold. At a time when looming economic uncertainty in the world, investment in gold is an alternative.
Source: http://www.defimedia.info/articles/8849/1/The-global-gold-race/Page1.html
Tags: Analysis, future prices of gold, gold futures, gold investments in gold, Gold news, the price of gold, gold price, gold prices, silver price, silver prices
Posted by CBN on August 14, 2011. Filed under precious metals. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this post
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