Can The Price Of Gold Be Influenced?
The supply and demand can influence the price of gold. A big part of the gold that has been minted over the years still exists in the world and it can rise to the surface one day for the right amount of money. Various Central Banks save gold in the form of ingots. In the case of a national crisis they are used as a last resort.
Because of the high amount of gold stored above ground, the annual production can influence very little the prices of gold. The gold used for jewelry, industrial and dental production reaches about 2.000 tons of gold. Retail investors and exchange gold funds have annually about 500 tons of gold.
A leading role in the price of gold is played by the Central banks and the International Monetary Fund. A long time ago dollars where fully convertible into gold. Money was considered to be both gold and dollars (paper currency). People preferred to carry dollars (paper money) rather than gold coins that where heavy.
People begin to invest in gold because of the political insecurity and the national crisis. They fear that they will lose all their assets and that the currencies will become worthless. So if the demand is high, the prices will also rise. Some of the most important consumers are countries like China and India where there seems to be an emerging business population that is looking to invest in commodity assets.
The price of gold is usually quoted in dollars. When the dollar starts to lose its power, the price of gold goes up. Another factor that influences the price of gold is the media. Papers will write in a frenzy about the gold investors that have started to make significant profits due to gold. And so, people become aware of the phenomenon and are advised to purchase gold. This will make the prices of gold and mine have an upward trend.
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