Are Gold Prices Responsible For Uneven Changes In Economy?

Introduction: Gold is precious or bullion metal in MCX segment

. Gold generally refers as a metal for making jewelry. Gold prices affect economy drastically. Its have inverse relation with economys growth. From past 5-6 years, its prices are hiking in uneven proportion. Gold's impact on the economy shines and vanishes, depending on how safe other investments are. In realm, you can say how the economy is healthy from price of gold. Gold is also deciding your ranks in the IMF due to amount of gold reserves. Golds hiking rates tell that neither U.S. economy nor euro zone is safe for investment. At present, U.S. has highest gold reserve in IMF. So you can say U.S. economy is stronger than any other economy.

Determinants for gold prices:

Most of the people do not understand how gold price is set. To understand the economic depression and inflation. There is need to understand factors that influence rising gold prices.

Gold Standard:

The gold standard is how countries secure the value of their currency to gold. Basically, they are willing to convert that currency for its value in gold. This permitted lightweight paper currency to be used for trade, instead of heavy gold bullion.

History of the Gold Standard:

Gold was first used as a standard in 643 B.C., when it was first used to create coinage. Wealth was defined strictly by the amount of gold you had.

Gold Fixing:

Today, the price of gold is set by the Gold Fixing. Also known as the Gold Fix or London Gold Fixing, this is a meeting of five members of the London Gold Pool that is conducted twice a day by telephone, at 10:30 GMT and 15:00 GMT. Officially, the purpose of the Gold Fixing is to settle contracts between members of the London bullion market. However, the Gold Fixing is widely recognized as the benchmark used to price gold and gold products throughout the world. Although it is officially only used to set the price of gold for members of the London Bullion Market Association (LBMA), it is used to establish a base price which is used for gold all over the world.

by: lambert86

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