Gold and gold investments due to the rising value of gold
Gold is the most common precious metal for investment. Capitalists buy gold as the best option in times of economic, political, social or other financial crises. These crises can include the stock market downturn, declining liquidity, and so on.
The value of gold
Throughout history, gold has often been used as a currency, and instead of setting the price of gold, other prices have been set based on it. After World War II, following the Bretton Woods Conference in 1946, the gold standard was set at $ 35 per ounce. This system was in place until 1971, when the United States stopped converting US dollars directly into gold. Since 1968, the common standard for determining the price of gold has been telephone conferences, which are held twice a day in the presence of representatives of five ingot trading firms and are called the "London Gold Fixing Standard" (in addition, the daily index). There is another, called the "spot price", which is the price per moment of this metal according to its price in stock exchanges around the world.
Factors affecting the price of gold
The price of this precious metal, like other commodities and investments, is determined by supply and demand. But unlike other investable items, storing or putting them on the market plays an important role in determining the price, because almost all the gold that has been mined to date has the potential to be priced at a reasonable price. To be marketed. The central bank and the International Monetary Fund play an important role in determining the price of gold.
Bankruptcy of banks: When the dollar could be completely converted to gold, both were worth the money. But most people preferred to carry banknotes with them instead of heavy gold coins. If people thought their bank might go bankrupt, they would suddenly withdraw their deposits. This is what happened during the global crisis and the collapse of the US economy in 1930. At the time, Roosevelt, the president of the United States, declared a state of emergency and outlawed the ownership of gold by American citizens.
Low or negative interest rates: If securities, capital and real estate are not profitable enough, then the demand for gold and other types of investment will increase. An example of this is the period of inflation with the recession that occurred in 1970 and led to the formation of an economic bubble in the precious metals market.
War, aggression, looting, crisis:In times of national crisis, people fear that their stocks will be frozen or that the currency will lose its value. In this case, they see gold as a product that can always meet their costs. So when a big uncertainty arises, such as war, the demand for gold increases.
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