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The important fact about the price of gold
The following graphs with very important information about the gold price developments and trends in the long term, gold price bubble formed. Figure (1) shows the evolution of the gold price since the year 1267 until 2010, at 740 years ago, after the gold price adjustment to inflation calculated on the pound sterling. Figure shows that in real terms the price of gold tends to be roughly constant, except periods of up in prices like period world.
Very important note: the format.
Such jumps in the price of gold is modified later, so the figure refers to very important fact, namely that the current price of gold was overstated, and that according to the general direction of a long-term price will return again to natural levels, this indicated again the gold price trends during this very long TimeSpan.
Figure (1) real price of gold during 740 years
The following figure illustrates the uses of gold extracted from the subsoil, according to shape the most important uses of gold are used dark blue and jewelry (52% of gold extracted), followed by the important uses of gold as an investment asset (18% of gold extracted), and Central Bank holdings of gold in an alloy (16% of gold extracted), and use gold for industrial purposes (12% of gold extracted). The shape indicates a very important evolution in the demand for gold is one of the main reasons behind the high price of gold is increasing demand for gold as an investment asset, which, according to the format represents the second largest source of demand for gold in the world. Increasing demand for gold as an asset by investment funds trading metal makes gold prices more volatile.
Figure (2) world production uses of gold
The following form udahattorat supply of gold and different sources, the Blue represents columns section, the supply of gold extracted from the gold mines, these quantities represent net additions of gold extracted, balance, while sections yellow gold sales from reserves of central banks and the International Monetary Fund, and the Green sections represent the supply of gold for recycling (scrap gold). Figure shows that during the previous ten years had to offer gold pseudo-static, which means that showing gold failed to be consistent with the increase in demand, particularly the increase in demand associated with the crisis, which helped gold bubble are at current levels.
Fig. (3) supply sources of gold during the last ten years
The following figure gives more details about the growth in the supply of gold extracted from the mines during the last ten years, it is clear from the figure that the annual presentation of the new production of the gold extracted from mines generally tends to decline, but a rise in the last two years caused by statute is unusual for gold prices, which encourages the supply of gold. Not surprisingly, gold rises to such high levels with supply constraints that shape.
Figure (4) production of gold extracted from the gold mines
Again the following figure underscores one of the fundamental causes of the current high price of gold, a gold investment funds still have, as evidenced by May 2010 was still gold investment funds (blue area) some 55 million ounces of gold, with the keeping of gold for investment purposes IFO gold price (yellow curve) to rise to historic levels (nominally).
Can gold traded funds collected 55 million ounces of gold, that means Gold is submitted to disaster in the future, when the world economic situation stabilizes, the price of gold rise these funds is that gold is a problem for them is that out of costly and does not bring back suits that cost, and then increase the opportunity cost of gold.
When investing in gold funds at disposal, bubble in gold, will be the victims are documented in precious metal prices could continue to climb indefinitely, paying excessive prices for gold in profits based primarily on speculative pressures. It’s the same motives behind all financial bubbles in the world throughout its history, but the problem is that speculators with short memory, or do not wish to be a man of illusion in which they live.
Figure (5) Gold demand trends for speculative purposes
The following figure illustrates another dimension again for one of the reasons for the rise in gold prices, the comparison of shape changes in the interest rate for 3 months (the right vertical axis), and the annual rate of change in the price of gold (the vertical axis left), note the shape that interest rate upward trend accompanied by declining gold prices fell, while gold prices tend to rise with interest rates declining, there is an inverse relationship between gold prices and interest rate trends, and Interest rates have tended to decline significantly during the current crisis, reaching almost zero, it is no wonder that price tend upward as shown. Figure confirms once again the expectations that currently prevails is expected to occur in gold price trend reversal with the world out of recession and interest rates trend upward.
Figure 6 impact of interest rate changes on the price of gold
Abstract This graphic formats:.
The bottom line is that gold actually offline or bubble balloons, different powers to pump more pressure, the problem is that with increasing pressure and reaching the critical level, the bubble will burst.
In summary, the current gold prices do not reflect the general trend of the gold price, and that the belief continued high gold prices in the future indefinitely is a misconception, that the current Gold bubble on the way towards the blast with reflection factors that led to their formation, but when the gold bubble will explode, no one but God knows, but it certainly would explode, as all exploded bubbles formed through history.