Gold Price Predictions

by admin on February 13, 2013

The dearth of reliable archaeological support makes it extremely difficult to isolate when exactly man stumbled upon this precious and heavy yellow metal. The excavation and unearthing of natural gold nuggets from Spanish caves of the Paleolithic age puts man’s first possible period of encounter with gold to about 40,000 BC. However, the argument about man’s first exposure to gold remains highly controversial, with some experts claiming it was 6,000 BC and others saying that the Egyptians used it around 3,000 BC for making jewelry. Interestingly some historians claim that it was not until 700 to 550 BC that people used gold as money in the erstwhile Western Turkish Kingdom of Lydia. The famous Roman poet of the Augustan period, Publius Vergilius Maro or Virgil (70 BC to 19 BC), author of the famous Latin works like “Eclogues,” “Georgics” and “Aeneid,” described gold as, “Auri Sacra Fames” (The cursed thirst for gold!). More recently, John Maynard Keynes sarcastically referred to gold as a “barbarous relic”.

Gold Measurement

The imperial measurement of gold is the troy ounce (Oz t) which is equivalent to 31.103 grams. Alternatively, you could say that 32.15 troy oz made 1 Kg. of gold. This precious metal, with a specific gravity of 19.3 is one of the heaviest known metals. Can you imagine that one cubic foot of gold weighs over half a ton or exactly 1206 pounds?

World gold production, scarcity/price

The world gold production is very low and stands at around 2000 tons per year, which is abysmal when you compare it to the American production of steel, which stands at around 10,500 tons per hour.

The experts estimated in 1995, that the total gold stock in the world is around 120,000 tons valued at around US$1.4 trillion.

Scarcity is the major factor that controls the gold price escalation from the 18th century. In 1792 the US Congress fixed the price of gold at $19.3 per troy ounce (or for 31.103 grams), and then revised to $20.67 in 1834, and 100 years later, in 1934, gold stood at $35 per troy ounce. After 1973, the US allowed gold to float freely against the different currencies, and in the same year, gold touched a price of $120 per ounce. In the year 1993, gold touched $397 per ounce and the current value in January 2013 is around $1639 per troy ounce.

Gold Price Prediction

Prediction of gold prices is next to impossible. If you ask ten financial analysts their opinion, you will probably receive 10 diverse answers that will rarely gel with one another. However, today with the heavy advancement in forecasting methods using the fundamental technical and inter-market analysis, some people consider it possible to arrive at reasonable conclusions on the price.

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