Spot Price Of Gold
A spot price is a current price in the market and the price it can be bought or sold and immediately delivered to the client/investor. The spot price for gold then is the price right now as you are reading this in the marketplace. Apart from the spot price, there is a future price. Future price is mostly about speculations and thoughts about what the prices may be. This unforeseen future is not determined as many variables such as a global pandemic are not foreseen. You may have a future price either too high or too low. Demand and supply are also key factors that may change without notice thus changing the future price. The future price is determined by the spot price. However, the future price is determined by what is happening now.
In the USA, we have had a lot of changes over the years due to one factor or the other. The gold structure in the United States is different from many other countries in the world. First, the measurements system in the USA is ounces and pounds whereas the global metric system is grams and kilograms. In the USA, it is an open business with fewer checks and balances as the government believes in a market that controls itself instead of one with constant checks and balances like in other leading gold producing countries. It is, however, dependent on external market factors.
Gold Price in the USA
The Federal Reserve System Gold Reserves.
Gold Spot Prices
|Gold Prices Per Ounce||$1,910.00||+3.00|
|Gold Prices Per Gram||$61.41||+0.10|
|Gold Prices Per Kilo||$61,406.50||+96.45|
The Federal bank can be simply put out as the bank of the government. Its main role is to cushion the economy in the case of a financial crisis such as the Great Depression of the 1930s. Its role in the gold price setting is simple. The federal bank keeps stockpiles of gold in its reserves. The gold is meant to be a contingency when and if a market crashes or the economy completely goes down due to factors such as rapid inflation as during the two world wars. In such a scenario, the dollar would be a very weak currency. The Federal Reserve would, therefore, liquidate the gold it has in its reserve and serve as the ‘backup currency’ option.
The government is a key buyer and minter of gold. This means the more gold it needs, the less there is in the market for everyone else. A basic demand and supply theory will show you that with low supply, and steady demand, the price will obviously go up.
Value of the US dollar
The dollar is by far the strongest currency and is used by many other currencies around the world as hegemony in determining their currency’s strength. This means that gold prices in most countries are in dollars rather than local currencies. If the dollar was to go up in value, it would require more dollars to buy the same amount of gold. This means that fewer people will afford the gold. With lower demand, the supply chain will have to reduce prices to have a sale. If the same dollar was to lose value, the gold price would now increase. This is because of the sudden rush by individuals to buy it dues to the increased flow of money around. Increased demand with a steady supply means that the available gold will not be enough and the sellers will increase the prices due to the law of demand and supply. A gold bar going for $1500 would go for $2000.
Another price determiner is the jewellery and industrial sector. Gold is mainly used in the jewellery sector with half of the world’s production going to the jewellery sector. The industrial sector is also becoming a key player as it is used in electronics although its demand is lower compared to the jewellery sector. If the demand for jewellery goes up due to better quality of life, then the supply needs to catch up. Demand is a quick and uncontrollable factor and mainly finds supply as a constant or even lower. This will see a rush by people to get their hands on the available gold in the market thus raising gold prices in the country. Decreased demand for the jewels due to factors such as a catastrophe will see a reverse trend with gold prices going down due to the drop in demand.
There may be a shift in the use of gold to alternatives such as lead, silver or copper, which are much cheaper. Any decrease in demand leads to a drop in gold supply and decreases the gold prices in the market.
Wealth protection is another determinant factor of gold prices. As gold is a tried and tested precious metal, many people choose to invest their wealth in it. It is not a measure of growth, but a defensive measure against the decrease in wealth. If a wealthy person sees that the economy is crashing down, they may rush and buy as much gold as their wealth can allow. This is to make sure that if the market does not recover in time, they will still have their wealth stacked up somewhere. The rush to buy gold will only result in prices going up as the supply cannot be rushed suddenly due to the demand shooting up overnight.
Investment demand. Anyone can buy into gold but in different ways. Some people may invest in gold mining companies by buying company shares or by buying actual gold shares without actually owning gold physically. This is a smart investment if you do not want to think about storage options for the precious metal. If the investment demand in gold is high due to increased money flow in the system of consumer preference, the gold price will naturally go up. A change in investors’ mindset into other precious metals away from gold will do the opposite by decreasing the prices of gold.
Gold Production As A Determinant
This is a crucial piece of the puzzle. Gold is on the earth surface and cannot be easily accessed like soil. We have to dig into the earth and this requires skilled labour and machinery, which is not cheap. With gold now having to be mined deeper and deeper into the earth, the supply is getting lower. This is because the cost of mining does not bring as much profit as before when it was easily accessible. If it costs more to get less gold, many companies will shift to something less expensive to mine. With a decreasing global supply, the prices will steadily increase.
The price of gold per gram.
Gold is an ore, just like any other precious metal or mineral. It does not come out as gold only, but with other metals. Some gold mines have been found to have other ores like copper or lead. Therefore, for you to get pure gold, you have to remove the impurities. For any successful trade of gold, purity is of utmost importance. Some uses of gold require a mixture with other metals since gold is not strong. An example is that most jewellery has a purity of roughly 58% gold while the rest is other metals.
Gold prices are in per ounces.
This is about 31.1 grams and is the standard market measurement of gold. To get the price of gold per gram, we will have to convert them to grams.
The price of gold per ounce can easily be calculated after converting to a gram. There are 28.3495 grams in an ounce. Therefore, the price of gold per ounce is pretty much the price of gold per gram multiply by the number of grams that make up an ounce.
As we have seen, gold is a very valuable and highly coveted precious metal that has stood the test of time. It is thus a highly recommended resource to buy into and we will show you where you can invest. However, before that, let us show you how unique a resource gold is.
• Gold coins are about 90-99% pure. This is a set standard as the coins have face value meaning that they can be used in place of money.
• Jewelry are 58.3% pure in America to 99% pure. The low purity ones are cheaper and of low quality. This is a vital skill you should have as a buyer of gold; checking the purity of gold. You may want to buy a 70% pure golden watch, but end up with a 60% purity watch. It is always advisable to have an expert to show you the tricks of the trade.
• Gold should not be considered as an investment for massive profits. Gold is mostly used as a preservation of wealth. This is why countries have gold reserves for their central banks to cushion their economies in case of market crashes.
• The buying of gold stocks is not a certificate of ownership of actual gold. The stocks are pure that, stocks. It is like buying stocks in gold manufacturing companies. It has a surety of gold attached to it.
• Gold may have the demand and supply factor determining its prices, but it is not a key player. The demand for gold may fall short but it will still be supplied at a normal rate. This is because most gold is stored in places such as the Federal Reserve rather than sold out. This makes the gold sector one of the most stable sectors to invest in.
Recommended resources to buy gold.
Coins are a favourite in the gold precious metal sector. This is due to the fact that gold coins have face value thus are easy to trade across the globe. Not all gold coins are acceptable. In the USA, there were some coins that were recalled during the great depression to help ease the economic crisis in the country. The Federal Reserve does have many other acceptable gold coins in circulation so do not be afraid. Even if the coin is not accepted, you can always smelt the gold and sell it as a pure gold gram instead of a coin. The good thing about gold coins is their universal acceptability and easy convertibility from government mints and private firms.
These are heavier than the standard measure of weighing such as grams and are mainly found in the Federal Reserve. The gold bars measure as heavy as a kilogram. Investors that have invested in the trade do not, however, like this. This is because the bars take a lot of resources to smelt down. The bars cannot also be sold easily due to their high prices. This is, however, a great way to preserve your wealth as its is cannot be stolen easily due to the weight.
These are good investments if you want to invest in gold without thinking about where to store your precious metal. The stocks can also be diversified in many companies and gold from different countries.
Jewellery. This is a perfect investment if you want to have the gold in your close proximity. You can have earrings, gold cuffs or even golden watch straps. When the gold is combined with another metal to make a jewel, such as diamonds, the jewellery adds value. The fact that it is in such small sizes it can be passed from generation to generation. Before buying any golden jewellery, always check the purity of the gold to make sure you are not duped into buying low-quality jewellery.
In conclusion, the best investment out there is in precious metals as they will always have value in them as they have stood the test of time. Gold is the best way to invest as it has many ways to be invested in with the government making sure that it will always be protected.