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China’s Gold Demand Bucks Global Trends

July 28th, 2012 No comments

China’s apparently insatiable demand for gold continues to buck global trends in the first quarter of 2012. According to a recent report by the World Gold Council, China’s gold demand reached a record high in the period, driven by investors keen to buy gold and coins as well as by jewellery demand,

China’s demand for gold has grown amidst the economic woes in Europe and the US (to a lesser extent), as well as lower demand in India largely due to new taxes and a weaker rupee. China’s high demand might have been in part driven by the Chinese New Year celebrations, during which jewellers sell gold bullion and jewellery as gifts for family members and friends.

In doing so, China has maintained its top position for the second consecutive quarter. According to the World Gold Council, the strong demand to buy gold has been driven by investor worries over inflation as well as property market curbs and central bank buying.

Global demand for gold dropped by 5 per cent on the year in the first quarter, and demand from the jewellery and technology industries also fell due to higher gold prices. However, central bank buying helped boost domestic demand in China. The outlook for gold demand in China remains bullish as investors are still concerned about inflation and seek a secure way to maintain wealth. The figures from the World Gold Council show that:

  • Total consumer demand was up by 10 per cent, reaching 255.2 tonnes (compared with India’s 207.6 tonnes).
  • Investment demand at the consumer level grew by 13 per cent on the year, reaching a record of 98.6 tonne for the quarter.
  • Jewellery demand grew by 8 per cent to 156.6 tonnes. This figure represents around 30 per cent of the world jewellery market for gold.

Though China’s demand remains high, it might be a better time to buy gold bullion rather than sell gold bullion. This is because the outlook for gold remains fairly bullish, and so investors might be able to take advantage of lower prices now as an opportunity to build wealth. Whether investors intend to sell gold bullion or are planning to buy gold, it’s always essential to conduct plenty of research and check the trends before making a decision.

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Top 10 Gold Traders of All Time

July 21st, 2012 3 comments

Gold has had a long and rich history with human civilisations. This precious metal has been used as currency and been traded as a commodity. What’s less commonly known is that many gold traders, in using a strategy to buy gold or sell gold, have accumulated significant levels of wealth. These are some of the top gold traders of all time.

Moses Mocatta

Moses Mocatta founded Mocatta in 1671. A leading trader of gold bullion in its time, the firm was broker to the Bank of England as well as the East India Company. Later it became Mocatta Goldsmid, was acquired by Hambros Bank which was later sold to Bank of Nova Scotia. Today it is known as ScotiaMocatta.

Stewart Pixley

Stewart Pixley was a senior clerk at the cashier’s office at the Bank of England before he became a leading gold trader. In 1852, he founded Pixley & Abell, which became a leading gold dealer in London, helping many buy and sell gold bullion. Sharps & Wilkins moved into gold brokerage in 1811 and merged with Pixley & Abell in 1957 to become Sharps Pixley. It was acquired by Deutsche Bank in 1993.

Samuel Montagu

Samuel Montagu was a British banker who founded a bullion broking partnership in 1853, helping others trade or buy gold bullion. Samuel Montagu & Co later moved into merchant banking. Montagu was a leading gold trader through his partnership and a member of the Gold and Silver Commission. Samuel Montagu & Co would later be acquired by HSBC Bank.

Nathan Mayer Rothschild

Nathan Mayer Rothschild started out as a textile merchant before moving into gold bullion trading in 1809 by assisting other to buy gold and trade gold. He financed the Duke of Wellington’s army in the Napoleonic wars through gold trading. In 1853 he purchased the Royal Mint Refinery, which processed the new gold discovered in Australia.

Graham Birch

Graham Birch was educated as a geologist, earning a PhD from Imperial College in 1984. He worked as a gold analyst and mining equities analyst with various broking firms before managing different gold funds. Birch retired from the industry in 2010 to run his own farm.

Jim Sinclair

Jim Sinclair is one of the most well-known precious metals, commodities, and foreign currency traders in modern times. Founding the Sinclair Group in 1977, Sinclair has worked as a precious metals advisor and a general partner in various New York Stock Exchange Firms. Sinclair is a popular commentator on finance and gold.

Milton Verret

Founding his own gold trading company in 2001, Milton Verret has reportedly made millions from gold trading. Although his company has faced some legal issues in the past, Verret remains an active trader, collector, and philanthropist.

Leonard Kaplan

Known for declaring that ‘gold is the best hedge against inflation’, Leonard Kaplan is a leading precious metals analyst and runs his own asset management company in Illinois.

Prithviraj Kothari

Kothari is an India-based trader and industry commentator. He is the managing director of Riddisiddhi Bullion Ltd, a Mumbai bullion-trading company established in 1994 that helps investors buy and sell gold bullion.

Marc Faber

This Swiss-born investor holds a PhD in economics and is often quoted encouraging investors to invest in or buy gold bullion. Faber predicted the slide of the US dollar, the rise of gold and other precious metals. He is a leading investment advisor and fund manager and is a regular commentator on precious metals.

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A Beginner’s Guide to Buying Gold

July 14th, 2012 3 comments

Gold is a popular investment for many people for a range of reasons. Gold holds its value well over time, and it’s often a secure investment choice in uncertain times. To buy gold as a beginner, it’s a good idea to check your own motivations for investing in gold and to know more about the options that are available.

Motivation and Strategy

Clarifying your motivation helps you to formulate an appropriate strategy.

  • Do you want to buy gold to hold wealth or to create wealth?
  • Is your strategy geared toward shorter term speculation, long term investing, or saving?
  • Are you taking a long term or a short term focus for your financial strategy?
  • Are you thinking of buying gold to diversify your portfolio?

You might have another motivation for buying gold, but all of these are valid reasons to buy gold bullion as part of an investment strategy.

Research

Doing some research might help you refine your investment strategy and set realistic expectations. When it comes to gold, there are a few things to note.

  • The price of gold has followed an upward trajectory fairly consistently since 2001. Any short term volatility could be an opportunity to buy gold at a cheaper price.
  • Although it’s not always the case, gold tends to have an inverse relationship with the US dollar, so that a weaker dollar makes gold cheaper to purchase.
  • The supply of gold tends to be constrained while demand has tended to grow, so gold is likely to maintain its value over the long term. Gold is considered by many to be a ‘safe haven’ investment, partly because it can act as a hedge against inflation.

Gold Bullion

To buy gold bullion might be a good option when you decide to invest in gold. Investing in gold stocks or equities might lead to exposure to stronger bear and bull cycles. These cycles might have a lesser impact on gold bullion prices, as the price you pay when you buy gold bullion is almost solely determined by the gold price.

Owning your own bullion bars could be conveniently organised as there are reputable companies that provide included services such as authenticity and verification, storage, security, and insurance.

Make Your Purchase

Once you’re clear about your investment strategy, it’s time to make your purchase. Be sure to buy gold bullion only from a reputable provider. Your dealer should be happy to provide a certificate of authenticity, and a range of associated services such as security and storage could make the process simple and more convenient.

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A History of Gold

July 7th, 2012 No comments

Humankind has had an enduring relationship with gold. This precious metal has played a prominent role in many different cultures across the world. People in ancient societies knew that to buy gold could be a secure way to hold wealth. In more recent eras, gold has facilitated trade and economic growth, and to buy gold bullion remains a popular strategy for investors seeking to build wealth. This history of gold sheds insight on our continuing relationship with this precious metal.

Gold in the Ancient to Medieval Eras

  • The first smelting of gold is generally thought to have occurred around 3600 BCE in Ancient Egypt, where goldsmiths used clay blowpipes to heat the smelting furnaces. Gold wasn’t yet used as a currency and to buy gold was the province of the wealthy.
  • 2500 BCE: The goldsmiths of Ancient Mesopotamia crafted exquisite jewellery from gold.
  • The first standardized gold coins were introduced by the Lydian King Croesus in 564 BCE. In 225 BCE, the Roman Empire switched from silver to gold coins.
  • During much of the Middle Ages, silver was preferred to gold for coin metal, as gold was rarer and more valuable. Gold was used as payment during the Crusades and as international trade expanded.
  • In 1300 ACE the first hallmarking system in the world was established in London. The purpose of the system was to check and guarantee the quality of gold. This system proved useful for merchants using or receiving gold as payment and for people who want to buy and sell gold bullion.
  • During the 14th and 15th centuries Europe saw a rise in gold values as European mining declined and gold coinage became more common, making it more expensive to buy gold bullion. The years from 1370 – 1420 are known as the Great Bullion Famine. The discovery of America by European nations in the 16th century increased gold supplies.

The Early Modern Era

  • James Marshall’s discovery of gold in Sacramento set off the California Gold Rush, which brought tens of thousands of gold seekers from all over the world.
  • Australian miner George Harrison discovered gold ore near Johannesburg, setting off another gold rush.
  • With the commencement of the UK gold standard in 1816, the UK government formally adopted a gold standard.
  • From 1870 to 1990, some of the remaining major countries (except for China) adopted the gold standard and linked their currencies to gold.

The Modern Era

  • The gold standard was abolished by various central banks during the interwar period to enable governments to print more money for the war effort. Countries eventually returned to the gold standard.
  • The gold price topped US$100 per ounce in 1973, and in the same year the US government legalised the possession of gold by private individuals. Other countries followed suit, allowing citizens to buy gold bullion and sell gold bullion.
  • The major European central banks formed an agreement in 1999 for gold to remain an important component in central banks’ reserves.
  • In 2005, the gold price hit US$500 for the first time since 1987.
  • In 2008, the gold price exceeded US$1,000.
  • Currently, the gold price remains above $1,500 per ounce.
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