Importance and strategies of gold a view By Varu Gaitonde


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  • 1.Gold Supply roughly is 2500 tonnes (mine production) per annum
    2.Traditional demand exceeds the supply significantly – some of this gap is filled by
    recycled Gold (old gold scrap sales)
  • Importance and strategies of gold a view By Varu Gaitonde

    1. 1. Overview Of gOld  By:  varsha gaitOnde  PalB 2235
    2. 2. Contents • • • • • • Introduction History of gold Value chain of gold Gold price from last decades Analysis of price Reasons
    3. 3. Introduction • Gold is a comparatively dense, shiny, yellow metal. • Gold is quite resistant to corrosion (by oxygen, but also many other chemicals). • There are medical (dentistry), chemical and industrial applications of gold. • However, aside these rather limited applications (for which, in fact, gold often can be substituted with other materials like copper, ceramics etc.) the metal is more or less useless.
    4. 4. History of Gold The history of gold, from 5,000 years ago until 2011, in 9 acts. 1.Ancient History and Classical Era 2. Medieval Times 3. Early Modern Times 4. Classic Gold Standard (1816 – 1914) 5. Interwar Period (1918 – 1939) 6. Bretton Woods System (1944 – 1971) 7. Bull Market: Upward Trend(1971 – 1980) 8. Bear Market: Downward Trend(1980 – 2001) 9. Bull Market: Upward Trend (2001 – )
    6. 6. How Gold is Mined Exploration Exploration Drilling Blasthole Drilling 6 Blasting Underground Mining Ore & Waste Haulage
    7. 7. How Gold is Mined Heap Leaching Mining Oxidization 7 Leaching Stripping Electro-winning
    8. 8. How Gold is Mined Smelting Gold Bullion Refining 8 Reclamation
    9. 9. Domestic Market India is the largest consumer of Gold in the world accounting for nearly 25% of the total gold consumption in the world. Most of India gold consumption is in the form of jewellery and as investment demand. Indian gold demand is supported by cultural and religious traditions which are not directly linked to global economic trends as a result of which demand remains steady even during high prices.
    10. 10. International Market Gold demand in 2010 reached a 10 year high of 3812.2 tonnes. Demand was up 9% year-on-year, and marginally above the previous peak of 2008 despite a 40% increase in the annual average price level between 2008 and 2010. In value terms, total annual gold demand surged 38% to a record of US$150 billion.
    11. 11. China is currently the largest producer of Gold in the world having overtaken US in the last couple of years. Asian consumers led demand with the revival of the Indian market and strong momentum in Chinese gold demand, which together constituted 51% of total jewellery and investment demand during the year 2010
    12. 12. Why do Gold Prices Soar? • Rising Inflation • Depletion of Gold • Excessive Demand • Gold Speculation • Wars and Economic Depression
    13. 13. Fluctuations In The Gold Price And Its Relation To Oil Markets • . The oil market is influenced by developments in currencies, especially dollars, and sometimes can cause developments in the world’s major currency markets. Factors that influence the price of oil are varied and include political issues, the balance of supply and demand, the status of alternative energy sources and the financial markets. However, while oil price changes have a significant impact on world financial markets, they do not have a direct effect on fluctuations in the world gold market.
    14. 14. Risks of Gold 1. Physical Risks of Gold 2. Gold Exchange Risks 3. Volatility 4. Political 5. Gold Scams
    15. 15. How tHe Gold PRices ARe deteRmined ? • Supply and demand conditions in the long run, • Short run due to the physical limitations on the gold mining and the inelastic characteristics of the gold production, changes in the gold prices are more subject to demand forces
    16. 16. Factors contribute towards the steady rise oF the gold rate? 1. First, a reduction of gold supply 2. From 2001 the global gold production falls within a decade by 10% 3. Still, demand in jewelry and by industry continues to increase due to India’s and China’s economic performances 4. Additionally, at the end of the decade central banks began to step up their gold reserves
    17. 17. Conti….. 1. Other important factors are the since 2001 increasing US national debt and the weakening of the US dollar relative to other currencies 2. The financial crisis of 2008, during which the US government nationalized the two biggest US mortgage lenders and the biggest US insurer, drove up demand for physical gold and exchange traded funds
    18. 18. uses oF gold • Gold is a soft metal usually alloyed in jewellery to give it more strength, and the term carat describes the amount of gold present (24 carats is pure gold) • Gold for jewellery can be given a range of hues depending on the metal with which it is alloyed (white, red, blue, green etc.) • Jewellery consumes around 75% of all gold produced. • Metallic gold is applied as a thin film on the windows of large buildings to reflect the heat of the Sun's rays • Gold electroplating is used in the electronic industry to protect their copper components and improve their solder ability.
    19. 19. 111
    20. 20. How Gold is Traded • Over the Counter • Between principals, not through exchanges • Contracts terms are flexible • Main centers: London, New York, and Zurich • Mining companies and central banks tend to transact their business through London and New York • Twice daily during London trading hours there is a “fix” which offers reference prices for that day’s trading. 24
    21. 21. The Settlement Process • The basis of settlement is delivery of a standard London Good Delivery Bar, at the London vault nominated by the dealer who made the sale. Currency settlement for gold transactions will generally be in US dollars over a US dollar account held in New York. 25
    22. 22. Market Dynamics: Gold Prices 26
    23. 23. OccasiOns fOr buying gOld . • Oman and Pongal in the south, Durga Puja in the east, and Dhanteras and Dusherra for the north and west • festival of Akshaya Thrithiya, which usually falls in April, has also become a red-letter day for gold purchases • There are 16 types, including rings, bangles, necklaces and special pieces for the head, nose, ankles and waist.
    24. 24. Thank You 29