Gold was first discovered as yellow shining pieces and it became the part of human culture. Its brilliance, natural beauty and luster, its great malleability and resistance to tarnish made it enjoyable to work with. Gold’s early uses were ornamental, and its brilliance and permanence linked it to deities and royalty in early civilizations. Power, beauty and gold have always gone together. In ancient times, Gold was used to construct shrines, idols, plates, cups, vases and vessels of all kinds, and for sure, jewelry for personal adornment. Gold is dispersed throughout world which is why its discovery occurred to different nations and different locations of the world. Everyone who discovered gold was impressed with this metal because of its beauty, shinning and luster. With advancement of technology, iron and copper are the greatest contributions to mankind but in spite of the fact gold came first to human culture and economic progress of the nations. Working with gold is quiet easy when gold is in pure state. Gold was found in pure form wherever it was discovered whereas other metals tend to be found in some mixture. Early civilizations associated gold with their gods and rulers and gold became the sign of power and glory, beauty, and cultural elite. Same thinking about gold was found throughout the world. Archaeologies suggest that Gold began to be used with the first known civilization in the Middle East. The oldest pieces ofA gold jewelry that is Egyptian jewelry were found in the tombs of Queen Pu-abi and Queen Zer in Sumeria. These are the oldest examples found in any kind of jewelry. Most of the Egyptian tombs were raided during several centuries and it was found that tomb of Tutankhamen was not disturbed by modern archaeologists. Inside that tomb, huge collection of gold and jewelry was found. From these collections, there was a gold coffin which showed Egyptian craftsmanship and gold working. The Persian Empire (Its Iran now-a-days) frequently used Gold in artwork as part of their religion before conquest of Arabs in 7th century A.D. Persian goldwork is famous for animal art but after the conquest of the area by Arabians, the art was modified. As the Roman Empire was flourishing, the power of the state attracted talented Gold artisans who created numerous extraordinary gold items. The Roman Empire began to expand the use of gold and designed household items i.e. kitchen stuffs and furniture for homes of the higher classes. Wearing gold necklaces became a beautiful trend in the Empire and by 3rd century AD the citizens of Rome used to wear necklaces with the picture of their emperor in it. Christianity spread through the European continent, and their culture as well as gold ornaments spread all over the continent. Before wide spread of Christianity, people buried gold with the dead people but this trend ceased with time and people began to collect gold in their churches. In America, people of Pre-Columbian cultures had advanced skills in the use of Gold before the arrival of the Spanish. Indian goldsmiths got most techniques their when the Spanish arrived. They were adept at granulation, filigree, pressing, hammering, inlay and lost-wax methods. The Spanish conquerors melted down and took back most of the gold from the peoples of this region. The greatest deposits, from whatever left, of gold from these times were in Andes and Columbia. During the frontier days of the United States, lot of discoveries of gold were made and news of discovery in a region resulted in settling a lot of people there, some risking their lives to find gold. Gold rushes occurred in many of the Western States. The most famous and prior discovery was in California at Sutter’s Mill in 1848. Other major discoveries were in Australia in 1851, South Africa in 1884 and Canada in 1897. This was the period of gold rushA when workers migrated to an area that had a dramatic discovery ofA goldA deposits. These gold rushes took place in 19th century in various regions of the world. Top the list is Australia following Brazil. Major gold rushes also found inA Canada,A South Africa, United States and smaller gold rushes took place in some other different places.
Top Gold Mining Countries:
2011 Top 10 Gold Producing Countries
Tuesday October 16, 2012, 5:00pm PST
ByA Michelle SmithA – Exclusive toA Gold Investing News
The locations, where gold is mined, are diverse. It is produced in more than 90 countries and some of these countries are at the top of list. According to an estimate more than 1800 tons of the gold mined was among 10 countries in 2011. No single continent or its countries have earned the repute of mining highest gold of the world. Top ten countries are spread around the globe. Top 5 countries with their statistics are given below China: China can be named as nation of gold. It is not only the top consumer but also the top producer of this yellow metal. China has no risk of being removed from that number one place as its gold production was 355 tons in 2011. While the 2nd highest gold mining country is about 100 tons below. China National Gold Group claims to be the country’s largest producer, crediting itself with 20 percent of China’s gold output. According to the US Geological Survey (USGS), China has 1,900 tons of gold reserves. Shandong is the leading province for gold production and within its boundaries Zhaoyuan, whichA reportedlyA produced over 28 tons of gold in 2011, is the top gold-producing city. China’s official gold holdings are 1,054.1 tons or 1.7 percent of total foreign reserves. Australia Australia’s gold production rose in 2011 from the 261 tons reported in 2010. Though gold can be found across the nation, about two-thirds of its gold production comes from the state of Western Australia. That is where the world-class Super Pit at Kalgoorlie is located. Consisting of numerous mining operations, and once called the Golden Mile, this landmark site was converted into Australia’s largest open-pit mine and is owned by Newmont Mining (NYSE:NEM,TSX:NMC) and Barrick Gold (NYSE:ABX,TSX:ABX). Australia possesses about 11 percent of the world’s economic demonstrated resources of gold, accordingA to Geoscience Australia. The USGS reports Australia’s reserves as 7,400 tons. Gold is a leading exploration draw, ranking second in this category of expenditure. The yellow metal is also among the country’s top 10 exports, raking in about $14 billion per year. Australia’s official gold holdings are 79.9 tons or 9.3 percent of total foreign reserves. United States A rise in gold production in 2011 from 231 tons in 2010 marked the second consecutive annual increase in the US. A portion of last year’s increase is attributed to the restarting of mines in the states of Montana and Nevada. The vast majority of the gold produced in this nation comes from Nevada, home of the Carlin trend. Newmont has renowned operations in the region, including 14 open-pit mines and four underground mines that operate as an integrated unit, employing various processing methods. Mined production of gold in the US in 2011 was about $12.2 billion. The US has 3,000 tons of gold reserves. Official US gold holdings are 8,133.5 tons or 75.4 percent of total foreign reserves. The US has the largest official holdings in the world. Russia Russia’s gold production in 2011 rose by 8 tons from 192 tons mined in 2010. Though Russia is fourth in terms of production, the nation ranks second in explored reserves. According to the USGS, the nation has 5,000 tons of gold reserves. The nation’s most prolific gold regions are Siberia and the Far East. Polyus Gold International (LSE:POLG), which claimed the title of top producer in Russia in 2011, operates in both areas. Vitaly Nesis, CEO of Polymetal International (LSE:POLY), recentlyA saidA that Russia has the best prospects for gold mining globally, but also said the industry is “shackled.” He blamed poor regulation for hampering development and production expansion. Russia’s official gold holdings are 936.7 tons or 9.6 percent of total foreign currency. Russia is the only nation on the top producers list with official gold purchases reported by the World Gold Council this year. Through August Russia bought 57.6 tons. South Africa Centered on the list is Africa’s top producer. From 2010 to 2011 production in this nation was virtually flat, rising a single metric ton, or 0.5 percent. Though South Africa is no longer the king of the gold-producing nations, it has the most gold resources as well as the world’s largest deposits (in Witswatersrand). The USGS places reserves at 6,000 tons. Still, the nation’s gold production has been on a downward slope for years. Through May, production declined over 10 percent compared to the same five-month period last year. Aggravating matters further in 2012, labor unrest has plagued the mining industry. Last month, about 39 percent of the nation’s goldA productionA was halted by striking workers. South Africa’s official gold holdings are 125 tons or 13.4 percent of foreign reserves.
Purity of Gold
The purity of gold is expressed in carats, often abbreviated to ‘ct’ or ‘K’ in the USA and some other countries. Pure gold has a purity of 24 carats. Various other purities exist that are measured relative to 24 carats. These are summarised in the table below. Purity Gold content Fineness 24 carat gold 99+ 990 22 carat gold 91.6 916 18 carat gold 75.0 750 14 carat gold 58.5 585 9 carat gold 37.5 375 An alternative method of expressing purity is ‘fineness’. This expresses the purity of gold in parts per 1000. Gold may be alloyed with other metals such as silver, copper, zinc or silicon to produce purities less than 24 carat. Silver and copper and most commonly used alloying elements for gold. Pure gold is too soft to be able to be used for jewellery. The metal chosen as an alloying element my influence properties such as workability and color of the resultant gold alloy. The purity of the gold is ‘marked’ onto jewellery by stamping or laser engraving. This acts a quality control stamp. Often this is done after the alloy is tested by a qualified testing laboratory or facility. Depending on which country the gold is produced, the caratage or fineness may be stamped into the item of jewellery. According to the International Hallmarking Convention, there is a “no negative tolerance” policy. This means that a gold alloy determined to consist of 749 parts of gold per 1000 would not qualify for a 750 quality mark. Methods used to assay or test the purity of gold include: A¢â‚¬A¢A A A A A A A A A Inductively Couple Plasma Spectrometry (ICP) A¢â‚¬A¢A A A A A A A A A X-Ray Fluorescence A¢â‚¬A¢A A A A A A A A A Fire Assay A¢â‚¬A¢A A A A A A A A A Touchstone A¢â‚¬A¢A A A A A A A A A Electronic Pen
A¢â‚¬A¢A A A A A A A A A Density
Chemical and Physical Properties of Gold:
Gold is not very hard; a knife can easily scratch pure gold and it is very heavy or even dense for a metallic mineral. Some of the other characteristics of gold are ductility, malleability and sectility, means it can be stretched into a wire, pounded into other shapes, and cut into slices. Gold is the most ductile and malleable element on our planet. It is a great metal for jewellery because it never tarnishes.
The color and luster of gold are what make this metal so attractive. Gold is found as the free metal and in tellurides. It is widely distributed and almost always associated with pyrite or quartz. It is found in veins and in alluvial deposits. Gold also occurs in seawater in concentrations of 0.1-2 mg ton -1, depending on the location of the sample. In the mass, gold is a yellow-colored metal, although it may be black, ruby, or purple when A¬Anely divided. One ounce of gold can be beaten out to 300 ft2 . Gold is a good conductor of electricity and heat. It is not affected by exposure to air or to most reagents. It is inert and a good reA¬”šector of infrared radiation. Gold is usually alloyed to increase its strength. Pure gold is measured in troy weight, but when gold is alloyed with other metals the term karat is used to express the amount of gold present.
Gold has an electrochemical potential which is the lowest of any metal. This means that gold in any cationic form will accept electrons from virtually any reducing agent to form metallic gold. It is the most electronegative of all metals, which once again conA¬Arms its noble character.
Investment in Gold:
1980 590 1494.59% 1990 391 -33.73% 2000 273 -30.18% 2010 1,410 416.48%
1970 to 2010 net change,A %
1,373 3710.81% The biggest reason behind investment in gold is its price increase. From the table it is clear that, if we exclude the price increase in 1980 for a while, prices of gold are increasing sharply and returns seem to be higher than any other kind of investment. People thought investment in gold as hedge against inflation and investment in gold got popularity in 1980’s when price increase was escalated. Nyiri studied gold prices in 1981. It was the period when gold prices rose sharply due to world-wide inflation. The researcher concluded that increase in gold prices is also due to increase in production costs due to opening of new mines in Czechoslovakia, Romania and Yugoslavia  . Anyhow, due to this price increase, people are preferring investment in gold. Investment in physical gold is considered risky due to some factors of theft, save storage, resale problems etc. Also, policies of different countries discourage investment in physical gold because it has a substantial impact on reserve of a country. According to study, USA is the leading country with most gold stocks followed by Germany. USA has 75.5% of physical gold as part of its reserves  . Offering gold physically may attract international smugglers to trade gold. This problem is minimized by offering electronic trade in gold. Two broadly used methods available for investing electronically in gold are ‘gold shares’ and ‘gold bullion’. Some studies show that gold shares are better than gold bullion as investment choice and traders should give priority to gold shares when they have choice between the two  . These days, following methods are available for investment in gold.
Investing in physical gold is the original form of investing in gold. Physical gold can be bought in the form of gold jewellery, numismatic coins or gold bullion. From an investment standpoint, bullion gold is preferable due to lower costs and higher liquidity (i.e. the gold can be sold easily at fair prices) than other forms of physical gold. Gold bullion is also available in two basic forms: Gold bullion bars and gold bullion coins, which can be legal tender in specific countries. The costs for smaller bars and coins are comparatively high. It’s generally the case that the smaller a bar or coin is, the higher the costs are for refining and minting charged by the distributors. If gold bullion is stored privately, security concerns must be considered. Really safe private storage is expensive. Privately stored gold has the additional disadvantage of low liquidity. Investors who decide to sell gold bullion must arrange the sale at a fair price and may need to verify the purity of their gold. Vaulted gold, i.e. physical gold stored in professional vaults does have the disadvantages of privately stored gold. Vaulted gold is usually cost-efficient and provides a high liquidity.
Gold backed securities
Gold backed securities are indirect investments in gold. Gold ETF (Exchange Traded Funds) and gold investment funds – both open ended or closed – are securities that (depending on the specific product) are backed by physical gold. A security is a financial instrument that represents a value – in case of gold backed securities the value of an underlying amount of gold. In the legal sense, an owner of a gold backed security does not directly own the underlying gold but only the security, which in turn certifies the right to the gold. While gold ETFs are funds, gold ETCs are only gold-backed bonds. That means, the holder of a gold ETC only has a claim against the issuer of the gold ETC and does not indirectly own physical gold through a fund, as with an ETF. Most gold ETCs are fully collateralized with gold, but still pose a potential counterparty risk to investors. In most cases, owners of gold-backed securities cannot request physical delivery of the gold. Costs of gold backed securities vary by product. Generally speaking, gold ETFs and gold ETCs are often cheaper than gold investment funds and mutual funds.
Gold mining stocks and gold mining funds
Gold mining stocks and gold mining funds are other forms of securities which allow investors some exposure to gold. Gold mining stocks and shares are not investments in gold but in gold mining companies. In effect, the gold price is just one factor that influences the price of gold mining stocks. Company-specific factors such as management, company-owned gold reserves, etc. also play an important role. Investments in a single gold mining stock are risky. An investment fund that invests in multiple gold mining stocks reduces risk for the investor. But as stated, gold mining stocks are not really investments in gold. Gold mining companies can go out of business and the stocks can lose all value. In contrast, physical gold can drop in value but will never become completely worthless or disappear.
Non-backed gold securities
Besides gold-backed securities like gold ETF and (some) gold ETC, there are also securities, whose value is derived from the gold price but which are not backed by physical gold. Examples for those securities are structured products and options. Structured products are based on derivatives, e.g. options. Structured products and options can pose significant risks to investors and are therefore generally not considered a suitable form of gold investment for retail investors. Structured products are basically obligations, thus, investors in such products bear the risk that the issure defaults on them (counterparty risk).
Other forms of gold investments
Gold accounts, gold certificates and gold trusts are additional forms of gold investment. The characteristics of those products vary widely from direct gold ownership to claims on gold or the price performance of gold with no real gold ownership.
Electronic Trading in Gold (International/National Markets):
Today, different markets offer trading in bullion gold electronically. London bullion market, NY Globex and NYComex are at top of the list. Some people think gold as a safe investment and this is why overall trading volume in gold is gradually on rise. These markets offer gold buying or selling of gold by using just 5-10% of original amount of gold. One can trade in gold for any interval of time. Some people are engaged in trading gold on daily basis, some on weekly basis and some on monthly basis. Volatility in gold market may lead to profits as well as losses. Various websites and softwares for trading in gold have been developed which can update user about prices every moment and make alarms etc.
Pakistan Mercantile Exchange (PMEX):
PMEX is the first electronic, web-based, demutualised commodity exchange of Pakistan. It is licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP) and trades all types of futures contracts. It started nationwide operations in May 2007. The entity is owned fully by institutional shareholders, which include the National Bank of Pakistan; the Karachi, Lahore and Islamabad Stock Exchanges; the Pak Kuwait Investment Company; and the Zarai Taraqiati Bank. Some of the most commonly traded futures contracts in such commodity exchange are agriculture futures, livestock futures, metals futures, energy futures, weather futures, currency futures, interest rate futures and equity and index futures. At present, gold, oil and silver dominate trading at PMEX, but the exchange also deals in palm olien, rice, sugar, wheat and KIBOR futures. Over the last several years PMEX has established a strong footprint in managing and offering international commodities in the Pakistan market A¢â‚¬A especially gold, silver and crude oil. This trend is expected to continue with the introduction of new products in the coming years. PMEX announced an increase of 671 % from last year. In terms of volume this amounts to Rs 490,515,367,875 in 2010A¢â‚¬A2011 versus Rs 63,610,332,963 previous financial year. The increase in terms of number of lots 1,475,582 were also remarkable and stood at a 365% growth over the same period. Pakistan Mercantile Exchange Limited achieved the highest ever monthly trading volume of PKR 129 billion in the month of August 2012 with a total of 325,000 contracts traded. This is a record increase, crossing the previous high of June 2012 of PKR 119 billion.
Economic factors that move the gold price:
Several factors are responsible for fluctions in gold prices; some of these are give below.
Central banks and theA International Monetary FundA play an important role in the gold price. At the end of 2004A central banksA and official organizations held 19 percent of all above-ground gold asA official gold reserves. Centeral Banks may sell or buy gold according to their requirements and reserves, these buying and selling cause a direct influence on gold prices. For example, European central banks, such as theA Bank of EnglandA andA Swiss National Bank, were key sellers of gold in 2009. Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005. In early 2006,A China, which only holds 1.3% of its reserves in gold, announced that it was looking for ways to improve the returns on its official reserves. It is generally accepted that interest rates are closely related to the price of gold. As interest rates rise the general tendency is for the gold price, which earns no interest, to fall, and as rates dip, for gold price to rise. As a result, gold price can be closely correlated to central banks via the monetary policy decisions made by them related to interest rates.
Hedge against financial stress
Gold, like all precious metals, may be used as aA hedgeA againstA inflation,A deflationA or currencyA devaluation. The currencies of all the major countries are under severe pressure because of massive governmentA deficits. The more money that is pumped into these economiesA – the printing of money basicallyA – then the less valuable the currencies become. If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases.
Jewelry and industrial demand
JewelryA consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27% of demand in 2009, followed by China and the USA. Industrial, dental and medical uses account for around 12% of gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonization. Jewelry and industrial demand has fluctuated over the past few years due to the steady expansion in emerging markets of middle classes aspiring to Western lifestyles, offset by the financial crisis of 2007-2010. In recent years the amount of second-hand jewelry being recycled has become a multi-billion dollar industry. Some companies have been offering good prices and fair services for their customers. However there are many companies that have been caught taking advantage of their customers, paying a fraction of what the gold or silver is really worth, leading to distrust in many companies.
The price of gold is also affected by various well-documented mechanisms of artificialA price suppression, arising fromA fractional reserve bankingA andA naked short sellingA in gold, and particularly involving theA London Bullion Market Association, the United StatesA Federal Reserve System, and the banksA HSBCA andA JPMorgan Chase.
War, invasion and national emergency
When dollars were fully convertible into gold via theA gold standard, both were regarded as money. However, most people preferred to carry around paperA banknotesA rather than the somewhat heavier and less divisibleA gold coins. If people feared their bank would fail, aA bank runA might result. This happened in the USA during theA Great DepressionA of the 1930s, leadingA President RooseveltA to impose aA national emergencyA and issueA Executive Order 6102A outlawing the “hoarding” of gold by US citizens.
Weakening or Strengthening of Currencies:
Strength of currency determines most of the above stated factors for gold price movements. Currency has a direct influence on gold prices. Since gold prices are fasten to US Dollar, so US Dollar has a direct influence on gold prices. Whenever USD strengthens, the price of gold moves down and vice versa. This movement due to USD usually takes no time. Weakening of USD may impact in fall in gold prices by $50/oz just in one second. There are further various statistics that influence currency of any country; some of these statistics are listed below Building permits CPI Crises/War Situation Existing Home Sales GDP Inflation Reports Manufacturing PMI Manufacturing Production Meeting minutes of any financial meeting Monetary Policy Statements New Home Sales PPI Public Sector Borrowing Retail Sales Speeches by Financial Ministers, central bankers, presidents Trade Balance Unemployment Claims
Focus on Electronic Investors:
Basic purpose of investors is profit, as huge as possible. Gold prices are sometimes speculated without any specific reason. These speculations are carried on just to attract investors. Investors keep an eye on everything that may lead the price of gold move up or down. Investors focus different economic factors of major countries. For example, Euro zone Crisis these days is a crucial issue for any kind of investors. Right move on the right time is the key to earn profits. But right move is rather difficult to find out. Right move is to buy gold when the price is about to rise and sell it when the price is about to decrease. No one can predict about this trend with 100% accuracy. Wrong move of trader may lead him to go bankrupt. Traders use different techniques and analysis to optimize their outcomes. Also with the knowledge of policy decisions and announcements, an investor should be expert in technical analysis of the prices.
A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume is known as technical analysis. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.Technical analysts believe that the historical performance of stocks and markets are indications of future performance.A In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, the technical analyst’s decision would be based on the patterns or activity of people going into each store. Different softwares are now available in market to represent the results of various technical analyses. Some websites are also designed for the task. These softwares / websites calculate and shows graphs for each technical analysis each selected part of time (it may be second, minute, 5 minutes, 30 minutes etc) and generate buy or sell signals. Traders trade in gold or other commodities accordingly. Some of mostly used technicals are given below Trend Moving averages Commodity Channel Index Parabolic SAR Standard Deviation Oscillators Bears Power Bulls Power Momentum Force Index Stochastic Oscillator Moving Averages of oscillator Volumes Money Flow Index Accumulation Distribution On Balance Volumes Others/Custom RSI Alligator Awesome Zigzag Anyhow these technicals may generate abrupt results. Some technicals are used for specific conditions only. In addition, technicals are silent about expected profits.