Gold is primarily a monetary asset and partly a commodity.
More than two third of gold’s total accumulated holding, relating to “value for investments.”is with central banks reserves ,private players and high –karat jewelry.
Market characteristic:
The gold market is highly liquid. Gold held by central banks, other major institution and retail jewellery is reinvested in the market. Due to a large stock of gold, against its demand, it is argued that the core driver of the real price of gold is stock equilibrium rather than flow equilibrium. Effective portfolio diversifier .gold can be used as a portfolio diversifier to improve investments performance.
Demand and supply:
South Africa is the worlds largest gold producer, followed by the us and Australia. India is the world’s largest gold consumer with an annual demand of 800 tones
London is the biggest and the oldest gold market in the world.
Gold purity measured in terms of karat and fineness. Pure gold is defined as 24 karat.
There is inverse relationship between gold and dollar. a weaker dollar makes gold cheaper for holders of other currencies and often lift bullion demand .A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand .perception of how much more the dollar will weaken will be key for gold in the short term.
Hutti gold mine in India is the only Indian company that produces gold by processing it from ore. the other two gold producer hindalco and Hindustan copper produce gold as a by product while processing copper.
Gold is hedge against inflation
Gold is the safest option because gold doesnot have much effect of macro economy factors like other financial assets. it remain effectless from GDP ,inflation,political instability be ...