World Gold Demand

Four major sources of demand for gold:

1) Jewelry Industry: The largest source of demand is the jewelry industry. In recent years, demand from the jewelry industry alone has exceeded Western mine production. This shortfall has been bridged by supplies from reclaimed jewelry and other industrial scrap, as well as the release of official sector reserves. Gold's workability, beauty, and worldwide appeal make this precious metal the favorite of jewelers around the world.

2) Industrial applications: Besides jewelry, gold has many applications in a variety of industries including aerospace, medicine, electronics and dentistry. The electronics industry needs gold for the manufacture of computers, telephones, televisions, and other equipment. Gold's unique properties provide superior conducting qualities and corrosion resistance. In dentistry, gold alloys are popular as they are resistant to corrosion and tarnish. For this reason gold alloys are used for crowns, bridges, gold inlays, and partial dentures.

3) Governments and central banks: The third source of gold demand is governments and central banks that buy gold to increase their official reserves.

4) Private investors: Finally, there are private investors. Depending upon market circumstances, the investment component of demand can vary substantially from year to year.



Article source: Compliments of the World Gold Council

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Whats a Troy Ounce?

Troy weight: The system of weights used to weigh gold,silver and other precious metals.It is believed to be that it was a system of weights used at the ancient fair of Troyes, in Champaign, France The troy ounce is supposed to have been brought from Cairo during the crusades. In this weight the pound is divided into 12 ounces, the ounce into 20 pennyweights, and the pennyweight into 24 grains; hence the troy ounce contains 480 grains, and the troy pound contains 5760 grains.

Metric Conversion

1 Troy Ounce = 31.103 Grams
1 Pennyweight = 1.555 Grams
15.432 Grains = 1 Gram
1 Grain = .0648 Grams

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What drives the prices of gold ?

The most important driver of the gold price over the medium and the long-term is the relationship between the US$ and the other major currencies. The official link between gold and the Dollar was broken in 1971 and the trends in the US$ and the gold price have been in opposite directions. We can also look at the gold price relative to the Swiss Franc. We do this because the Swiss Franc is the currency with the highest positive correlation to the gold price.

In the short-term the influences on the gold market can vary from one week to the next and can range from selling by the banking community specifically designed to suppress the gold price(profit taking), to news/propaganda, to the medium/long-term influences mentioned above.

If you want a easy answer: Primarily gold trades inversely to the US dollar. The dollar is down so gold is up.With the dollar being so weak,gold will remain high til the dollar rebounds.

Comments welcome,for i know there is more to the story than what i have touched on.

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