Gold is the precious metal that continues to hold its own in all seasons and scenarios; it has a very big demand that may fluctuate now and then, but, its value has always been on the rise.
In fact, its storage by the central banks of all the countries in the world plays an important role in the economy of those countries. It is the prime consideration in the consumer world as well as the world of investments.
Gold is not anymore the primary form of currency in developed countries like the United States but the impact that it has on the value of these currencies is still quite significant. In fact, there is also a very strong influence on trading in foreign exchange and the value of the metal for those countries.
There are many factors would serve to explain to some extent the vital relationship between the trading of foreign exchange and this metal:
1.For backing up currencies.
Since ancient times, it was the supporting metal, even during the Byzantine Empire, gold was used to support the currencies that were termed as the legal tender; it continued to be considered as the reserve currency throughout the whole of the 20th century. Even the Gold standard was used by the United States till the year 1971.
The main basis of printing currency notes in most countries was the holding of Gold; they could only print currency notes not exceeding the value of Gold that they held in their stock.
The volatitlity of the U.S. dollar and other currencies does prompt some economists even now to abandon the current system and revert back to the Gold Standard.
2. Hedging against Inflation: The high demand and value placed on Gold prompts the investors to place their money in Gold since it is always in short supply allowing it to retain its high value. It is time-tested commodity for getting proper returns,
3. The price of this precious metal affects countries that import and export it.
Whenever a country’s imports exceed the value of its exports, the value of its nation’s currency will decline and vice versa. Countries that are net exporters, therefore, see the value of its currency going up. Similarly, countries that possess more Gold or those that export Gold will have a stronger currency whenever the price of Gold goes up.
That is the reason why a country like India, being a very large importer, continues to have a weak currency; the main reason for this phenomenon is that India produces only about 0.5% of the total produced in Asia leading to this economic drawback.
The Indian economy is adversely placed due to being a major producer of ornaments both for investments as well as decorative purpose.
4. Purchases tend to reduce the value of the currency used to purchase it.
Inflation is almost always the reason when a country’s central bank purchases it since the supply and demand cycle is imbalanced. The basics being the same, countries resort to producing more currency than the deposits that they hold, creating an excess supply of the currency.
5. Gold prices often measure the value of some local currencies, but analyses should be rational.
The usage to value the currency of a nation may not always be accurate sudden requirement of Gold may cause prices to rise even though the currency is on sound footing. Hence, proper analyses should be resorted to make a realistic assessment.
Among the producers of this lustrous metal that has been the fancy of millions for its use in ornaments and trinkets, the Philippines currently ranks fifth in Asia due to its standing as the fifth top gold producer in Asia. It also happens to be listed in one of the six Asian countries that are producing about 91 percent of the precious metal in this continent.
The leader amongst the Asian countries that produce the precious metal is China since it took over the lead since 2012; it has been producing Gold for a long time but its production suddenly rose in 2013 with a spurt in production when it reached 397 tons in 2013 from the earlier 204 tons which brought it to the top rank in Asia.
In a survey conducted by the 2016 episode of the GFMS Gold Survey, it emerged that China produced 458.1 Metric Tons of gold in 2015 revealing a record 14% rise in the level of production of Gold a record on Year-On-Year increase.
Next in the line of highest producers comes Indonesia which is an archipelago in South East Asia that produced about 134.3 Metric Tons in 2015; this was also revealed by the GFMS Gold Survey 2016. Its source of Gold is the Grasberg Mines that are considered to be one of the largest in the world.
Third in production is Uzbekistan with a production of 83.2 Metric Tons in 2015 and is a pillar of the economy of this country; its Murutau Gold deposits are considered to be the largest open-pit gold deposits in the Kyzylkum Desert of Uzbekistan.
• At fourth place is Kazhakstan with annual production of 47.5 Metric Tons,
• At fifth spot is the Philippines with 46.8 Metric Tons, and
• Mongolia brings up the sixth place with a production level of 31.3 Metric Tons.
According to the Survey, there was no significant increase in the production o; only 1% in 2015 over the previous years; a figure of 3158 Metric Tons with the United States, and Indonesia offsetting the losses in production elsewhere, particularly in China.
This was the seventh year of record-breaking production, successively.
Umrao Singh
umraoz.wordpress.com
Written for: Lars-Magnus Carlsson
www.thephilippinepride.com?utm_source=rss&utm_medium=rss
Tuesday, 22 November 2016
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