International gold market

The current international gold market is a major factor in the supply of gold production and sale of central bank gold. Enhance the volume of gold production, the crucial point is the discovery of new gold and gold extraction methods improve. Because of the discovery of gold mines is not easy, and a gold mine from discovery to exploitation, or even ten years required between the time a few years, so in the short term have little effect on gold production. The central bank to sell gold and therefore also the strategy that the countries gold reserves in the near future on the international gold market has a significant impact.
The 1980s to the 1990s are a period of U.S. industries, the United States with low inflation, interest rates up to 6%, compared with earnings of gold held by a small, but also spending a lot of custody fees, so investors are willing to hold U.S. dollars, European countries as the central bank. During the 1990s, made it clear that the European central bank gold reserves would be reduced to 15%. Center for European banks to reduce their gold, gold prices cause.
In 1999, listed by the euro and gold prices continue to lower the impact of the United Kingdom Ministry of Finance out of a heavy bomb, decided to improve the structure of the national currency reserves ratio, and plans from 1999 to 2000, the representatives of the Bank of England British government-run auction site 5, selling 125 tons of gold, equivalent to 3% of the entire reserve. The United Kingdom to sell gold directly cause gold in August 26, 1999 fell to the lowest point in the history of 251.9 U.S. dollars / oz. This moves the United Kingdom so that the global market really began to worry that the international community must set up a new rule, in order to avoid the recurrence of similar situations, thus the birth of the "Washington Agreement gold." The agreement provides for, including the European Central Bank and other central banks will be 15 in the next 5 years, have limited the sale of 400 tons of gold, 5 years, not the total sale of gold more than 2000 tons. At the same time in 2004, "The Washington Gold Agreement" expires, the European Central Bank and central banks with the 14 re-signed the "the central bank gold sale agreement" to ensure that the next few years the sale of gold by central banks are relatively stable, not increase substantially.
The demand for gold mainly refers to the demand for gold jewelry and investment demand. Add 2006 the global industrial demand for jewelry fell by 16%, but the first half of 2007, demand for jewelry processing at a relatively low level of last year on a strong rebound in gold price rally this year has laid a foundation; At the same time, the U.S. dollar continue to put the international political tension and instability in international financial markets, and promoted the growth of gold investment demand, which is the wave of the important reasons for gold price rally.

Basic knowledge of gold investment

World Gold Council is an international gold promotion body, and not to any gold business is to promote the institutions, and, the World Gold Council does not forecast the gold price.

1, the price of gold changes. Fluctuations of the gold stock index than some fluctuations of the small, long-term fluctuations of the gold relatively small, the gold itself is relatively stable, and it shares the risk of not so high. However, at a special time, the breakup of the Bretton Woods system in 1978, the real gold is the official currency official functions cancellation delinked from the dollar, this time the dollar gold surged to 800 dollars. 1988 outbreak of the Iran-Iraq war, the price of gold has a lot of long. Actually closer to gold and currency and stocks, large stocks, small stocks is not. Many people say that gold is also precious metals, but also goods, but tended more financial products.

Because we generally think that gold is priced in dollars, so contrary to the dollar, a stronger dollar, gold weakness. Over the past 10 years is such a thing. But gold is priced in dollars, but it is not priced in United States dollars, which is the basic difference. The gold price in dollars does not make decisions, but do denominated in United States dollars.

In the past year and a half, the dollar depreciated by 30 per cent, in general depreciation of the dollar by 30 per cent in dollar terms the gold certainly walk up the 30 per cent appreciation of the euro relative to the euro positioning of gold should go in the other direction, but is not the case. Its price in the past year and a half of the performance is very special to other currency-denominated gold is strong. This is a new phenomenon.

Gold and other investment products correlation was low. Is not the major asset movements and other similar direction. That is to say, if the economy is good or explosion when the stock market, and gold is not the case. The general trend of financial assets are exactly the same, are charged with the same rose, but gold is not charged with, and got a low correlation, gold is a special financial assets have a strong hedge against inflation, its hedge against inflation of the show very clearly here. In terms of any international market is this phenomenon, in local currency-denominated gold national trend with local financial assets correlation is not high.

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