They say all that glitters is not gold. But gold glitters enough to have an emotional bonding with humans. Markets might not be static due to present circumstances, but we give you reasons as to why you must follow the bullion market and make wise investments

Gold has many theories and ancient lores associated with it. Gold is not merely about adornment. It is used as a base element in various industries, enhancing its charm further. I come across people who invest in various markets on a daily basis. So, I thought it was pertinent to answer some key issues related to the gold industry along with some fun questions, which will help sharpen your general IQ. Read on…

What is the World Gold Council’s forecast for 2020?

Demand for gold dropped to 892.3t in Q3 – its lowest quarterly total since Q3 2009 – as consumers and investors continued to battle the effects of the global pandemic. At 2,972.1t year-to-date (y-t-d) demand is 10% below the same period of 2019.

Bar and coin demand strengthened, gaining 49% y-o-y to 222.1t. Much of the growth was in official coins, due to continued strong safe-haven demand in Western markets and Turkey, where coins are the more prevalent form of gold investment. Q3 also saw continued inflows into gold-backed ETFs (exchange traded funds), although at a slower pace than in the first half. Investors globally added 272.5t to their holdings of these products, taking y-t-d flows to a record 1,003.3t.

The total supply of gold fell 3% y-o-y in Q3 to 1,223.6t, despite 6% growth in gold recycling, with mine production still feeling the effects of COVID-19 restrictions.

Record high gold prices also resulted in the largest volume decline, especially in China, India.

What is the bullion market?

A bullion market is a market through which buyers and sellers trade gold and silver as well as associated derivatives. The London Bullion Market is known as the primary global bullion market trading platform for gold and silver.

What will be the bullion price in India?

Despite the closure of the bullion market, central banks, fund managers, and investors are investing in gold, which has led to the rise in the price of gold. It is worth mentioning that the price of gold in the domestic futures market reached Rs 45,720 per 10 grams. While market experts assumed that gold will cross the Rs 46000 level. Its price is expected to be Rs 50,000 per 10 grams for the rest of the year.

Analysts at Bank of America BofA Securities believe that gold prices in the international market may rally to $3,000 per Ounce (oz) by the end of 2021. Translated into Indian rates, which at current exchange rates, can be around Rs 82,000/ 10 grams. Therefore, in about a year and a half, gold prices in India can rise by about 75 per cent. In the international market, gold is currently trading at a range of $ 1,750.

What is the size of the world gold market?

Simply based on size, the gold market stands at $2.4 trillion.

What is the difference between gold and bullion?

Gold would include various forms of gold like coins, bars and other forms of the metal. When you talk of bullion, it also includes other precious metals like silver and platinum. So, when we say trading in the commodity market, it would also include other precious metals.

What is the world gold council? How does it operate?

The World Gold Council is the market development organisation for the gold industry. Its purpose is to stimulate and sustain demand for gold, provide industry leadership and be the global authority on the gold market.

WGC works with large and diverse sets of partners to create access, drive innovation and stimulate demand, while providing a voice for its members. Most importantly, it provides insights into international gold markets, helping people to understand the ‘investment qualities of gold’ and its role in meeting the social and economic needs of society.

The gold market has become larger, stronger and widely understood. WGC has worked towards increasing recognition of gold as financial asset across a wide spectrum of market segments.

Is it wise to invest in gold given the current circumstances?

Global financial powerhouse, analysts at Goldman Sachs, have placed their bets on the yellow metal and said, given the current global market scenario, it was a better hedge than crude oil. At the end of March this year, analysts at Goldman Sachs predicted that crude oil prices could enter negative territory. GDP, central bank balance sheet or official gold reserves will remain the key determinants. At the same time, it has decided to increase the 18-month gold target from $2,000 to $3,000.

What is the future prediction for gold market, say for the next 10 years?

Year Gold Price Prediction

  • 2020 $2,100
  • 2021 $1812
  • 2022 $2,449
  • 2023 $2,721
  • 2024 $2,988
  • 2025 $3,012
  • 2030 $3,732

How did gold’s name come about?

Gold gets its name from the Anglo-Saxon word ‘geolo’ for yellow. The symbol Au comes from the Latin word for gold, ‘aurum’. Gold has only one naturally occurring stable isotope: gold-197.

When was gold first used by humans?

According to archaeologists, gold was first used as coinage in the late 8th century BCE in Asia Minor, in what we know as Turkey today. Irregular in shape and often with only one side stamped, the coins were usually made of electrum, an alloy of gold, silver and traces of other alloys. Ancient Greeks referred to it as ‘white gold’.
Gold has always played an important role in the international monetary system. Gold coins were first struck on the order of King Croesus of Lydia (an area that is now part of Turkey), around 550 BC. They circulated as currency in many countries before the introduction of paper money.

Where was gold first mined?

  • Most archaeologists believe that much of the gold came from mines along the Nile River, with some mines located as far as 800 miles south of Cairo. The Nile River carries gold all throughout. Much of ancient Egypt’s gold was sourced from this massive river.
  • Many theories abound, but it is impossible to know the exact date that humans first began to mine gold, but some of the oldest known gold artefacts were found in the Varna Necropolis in Bulgaria. The graves of the necropolis were built between 4700 and 4200 BC, indicating that gold mining could be at least 7000 years old.
  • Scientists discovered that 40 percent of the world’s gold is 3 billion years old. Scientists have for the first time directly dated gold from South Africa’s Witwatersrand gold deposits, source of more than 40 percent of all gold so far mined on Earth.
    So, in short, there is no one source that definitively claims about the origins of gold.

Where is the most gold mined?

The largest single source of gold in history has been the Witwatersrand Basin of South Africa. Witwatersrand accounts for roughly 30% of all the gold ever mined.

Which country holds the most gold in the world?

According to the latest IMF statistics, the United States remains the largest holder of gold, holding some 8,133 tonnes on its stores. Most other countries fall below the 3,000 tonne mark, with the IMF taking third place on the list.

Is gold rarer than diamonds?

In its elemental form, gold is significantly rarer than diamonds. Gold is more abundant than large diamonds, but diamonds as a class of material are not particularly rare.

Which countries produce the largest amounts of gold?

  1. China – 383.2 tonnes. For many years, China has been the top producing nation, accounting for 11 percent of global mine production.
  2. Russia – 329.5 tonnes.
  3. Australia – 325.1 tonnes
  4. United States – 200.2 tonnes.
  5. Canada – 182.9 tonnes.
  6. Peru – 143.3 tonnes.
  7. Ghana – 142.4 tonnes.
  8. South Africa – 118.2 tonnes.

The statistics are as of 2020. Gold mining is a global business with operations on every continent, except Antarctica.
Why can’t we make jewels out of 24 karat gold?

Pure 24 karat gold is way too soft. While it can be made into thin wires and sheets, it is not possible to make jewellery as the jewel or stone might fall off due to its softness. Most jewellers use 22 karat gold. Gold comes in varying forms of purity – lowest being 10 karat to 24 karat being hundred percent pure.

  • Gold less than 24 karat, is always an alloy with other metals such as copper, platinum and silver.
  • 22 karat gold is considered to be durable as it is a blend of alloys like copper and silver, making it harder.
  • 24 karat gold is 100% pure gold, 22 karat is 92 per cent gold and 8 per cent silver or copper.

So, as a business strategist Hirav Shah has expertise in varied fields, as an astro guru and as a consultant for some high-flying businessman, it is his advice to read market developments carefully and consult the right people before making a final decision.