When a country’s currency devalues significantly, gold held by central banks and Federal Reserve can be used in trade as a means of exchange to facilitate trade. For governments to hedge against instability in currency, gold is deposited in reserve by governments, private individual and companies to be exchange when need arises. A country’s development is pegged on the amount of gold in its reserves and is used to determine the value of a country’s currency. With a good reserve of gold, economic stability is realized alongside stable commodity prices in a country (World Gold Council). The United States ties its dollar on the price of gold and gold in its reserves which in turn the international community tie their currency against the value of the US Dollar. This explains the reason why the dollar is the widely accepted means of foreign exchange against all currencies in the world. Before 1971, gold was the only exchange standard. Since then, international cooperative monetary system has been used. Instead, it has remained trading in the international markets freely, with forces of demand and supply determining its mean price just like any other commodities. Though it has been replaced by international monetary system, gold still enjoys about 13% official reserves around the world as a cornerstone reserve asset. Gold as a commodity has been trading in the international market, often fetching high prices in times of economic turmoil. When the international financial markets are in great upheaval, traders dumb the socks and other financial instruments to save the devaluation of the positions in gold reserves. For example, when the prices of stocks or other forms of securities are falling, traders resort to buying gold. This takes to the hypothesis that, when the price of stock index is falling, the price if gold rises. Over the recent past, there has been sharp increases I the prices of gold as most of the major financial markets were faltering around the world. This is so because gold has been seen as a substitute investment instrument to the financial system. Currently the price of an ounce of gold in the international market is about $1,608. S&P 500 is one of the major indices in the United States that can be used in this study to compare its performance against that of gold. To get the relationship in movement and to proof the hypothesis quarterly performances can be looked at with a main focus in the pre and after 2008 financial crisis. The explanation to the relationship that can be adduced is found on the graph. S&P 500, alongside other indices in the United States like Dow Jones Industrial Average (DJIA) and NASDAQ, have been observed to be inversely correlated with the price of gold over time (World Gold Council). When there is exists uncertainty in the economy and by extension the financial markets, investors tend to offload their positions in stocks and other securities to buy the save haven; gold. Gold has been taken as the ultimate safe haven as explained earlier. When there is an imbalance between supply and demand for shares, the prices will either pick up or tumble depending on the two forces. When there exist jitters on the stability of the economy which will affect the performance of the listed companies in the securities exchange the shares will drop in their valuation. Investors buy stocks expecting to get returns either from good dividends or appreciation in the share prices, increasing the net worth of an
Gold stocks and index performance comparison Name: Number: Course: Lecturer: Date: Gold stocks and index performance comparison Gold for ages has been the only reserve means by central banks that is universally accepted and held in place of formal country’s currency…
Initially, central banks were created to serve as bankers to the government, that is, manage government finances. However, over the years it added various other functions. A modern central bank also provides a range of services to commercial banks. In this regard it is the bankers’ bank.
Modern uses of gold include dental, industrial, and electronic applications. However, a large proportion of gold goes into the fabrication of jewelry. On the other hand, silver is used in jewelry and silverware, photography, industrial and decorative uses.
Now, views are being raised about the possibility of reintroducing the Gold Standard as the common currency for transaction, with economic experts favoring as well as opposing it. With the earlier practiced Gold Standard exhibiting both benefits as well as negative results, the current plan could also have similar advantages and disadvantages.
(AMZN) and 3M Co. (MMM). Abbot Laboratories (ABT) belongs from the health care sector and specializes in Drug Manufacturing. The company was founded in 1888. The company is located in United States and possess a workforce of 90,000 fulltime employees. The company practices discovery, development, manufacture, and sale health products globally.
Also, it presents a view on the economic importance of the ore and also the general trend of the gold increasing demand since its discovery. Gold is the most expensive material and it’s not largely mined in many parts of the world. The paper will expound further on key areas where gold is found in plenty and what are the cautions undertaken in mining the gold to avoid any landslides due to pressure on the open ores left after the gold extraction.
This paper primarily focuses on comparison of various major economic factors, that characterizes development patterns in China and the United States. These economic factors identified for comparison include labor force, household income, poverty line, unemployment, currency exchange rates, GDP per capita, exports, GDP, imports and others.
Gold is the most expensive material and it’s not largely mined in many parts of the world. The paper will expound further on key areas where gold is found in plenty and what are the cautions undertaken in
BMI is used to determine the suitability of person’s weight to their height. In healthcare, BMI is used to determine a person’s health status with relation to their general health. BMI values range from 18.5 to 25 for a healthy individual, and those that fall below 18.5
the cash is exchanged between the corporation and shareholder for the purpose of reducing the number of shares outstanding. It is on the company to either keep the shares as treasury stock or retire these repurchased shares, which are available for re-issuance.
4 pages (1000 words)Research Paper
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