Investing in your Future

Gold is the most admired precious metal in which people invest. It is a safe-haven against any financial, political, social or currency-based crises, such as: investment market declines, currency failure, inflation, war and social disorder.

Influence on gold price:
The day price of gold is driven by supply and demand. Since most of the gold ever mined still exists and is potentially able to come on to the marketplace for the right price, unlike most other commodities, the signpost and disposal plays a much bigger role in upsetting the price. At the end of 2006, it was estimated that all the gold ever mined totaled 158,000 tons.

Known the gigantic quantity of stored gold, compared to the annual production, the price of gold is primarily affected by changes in sentiment, rather than changes in annual production.

In times of public crisis, people fear that their assets may be seized and that the currency could become worthless. They see gold as a solid asset which will always buy food or transportation. Hence in times of great uncertainty, particularly when war is feared, the demand pro gold rises.

As dollars were fully convertible into gold, both were regarded as money. However, generally people preferred to carry around paper banknotes rather than the somewhat heavier and less dividable gold coins. If people feared their bank would fail, a bank run might have been the answer. This is what happened in the USA during the Great Depression of the 1930s, leading President Roosevelt to impose a national emergency and to proscribe the ownership of gold by US citizens.

If the return on bonds, equities and real estate is not adequately compensating for venture and inflation then the demand for gold and other alternative savings such as commodities increases. An example of this is the period of Stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metals.

The system held up until 1971 Nixon Shock, As the US stopped the complete convertibility of the United States dollar to gold. Since 1968 the usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily (telephone) engagement of representatives from five bullion-trading firms. Furthermore, there is keen gold trading based on the intra-day spot price derived from gold-trading markets around the world as they open and close during the day.

All through history gold has often been used as money and, instead of quoting the gold price , all other commodities were measured in gold. After World War II a gold standard was established following the 1946 Bretton Woods talks, fixing the gold price at $35 per troy ounce.

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The Gold Fixing, or the London Gold Fixing or Gold Fix, is the procedure by which the price of gold price of gold is set on the London market by the five members of the London Gold Pool. It is designed to fix a price for settling contracts among members of the London bullion market, but, informally, the Gold Fixing provides a familiar rate that is used as a benchmark for pricing the majority of gold products all over the world's markets.

The gold price fix takes place twice daily at 10.30am and 3pm, London time.

The original fixing took place on September 12, 1919 amongst the five principal gold bullion traders and refiners of the day. The price of gold at that time was four pounds 18 shillings and ninepence per troy ounce.

Due to government controls and war emergencies, the London Gold Fixing was poised between 1939 and 1954.
price of gold are fixed in United States dollars (USD), Pound sterling (GBP) and European Euros (EUR).

Historically, the Fixing took place twice daily at the City offices of N M Rothschild & Sons in St Swithin's Lane, but since May 5 2004 it takes place by telephone. In April 2004, N M Rothschild & Sons announced so as to it intended to withdraw from gold trading and from the London Gold Fixing. Barclays Bank took its place from 7 June 2004, and the chairmanship of the encounter, formerly held permanently by Rothschilds, currently rotates annually.

On January 21 1980 the Gold Fixing reached the price of $850, a figure which was not overtaken until January 3 2008. This is when a new record of $865.35 per troy ounce was set in the morning Fixing. However, with inflation, the 1980 high would be equal to a price of $2398.21 in 2007 dollars. So, the 1980 record still holds in real conditions.

While gold is traded in markets all over the world, the market is essentially homogeneous since the gold price is always in dollars and the gold traded is "loco London" (gold deliverable in London and meeting London trading standards). The London PM fix is normally considered the main reference price for the day and is the price most often used in contracts. The price of gold is quoted in USD per troy ounce.
Since May 2004 it has been conducted by telephone. The chairman begins with a 'trying' price. The five fixing members' representatives relay the price to their dealing quarters. And these are in contact with other dealers. The market members then announce how much gold they are prepared to buy or sell at that price. The dealers, who are in contact with their clients, could change their order or add to it or cancel it at any time; the view declared by the dealers is the net position outstanding among all their clients. (If one is buying two tonnes and another is selling one tonne, then he declares himself a buyer of one tonne.) If more gold is required than is offered, then the price will be adjusted upwards (and vice versa) until equilibrium is reached. At this point the gold price is fixed. On very rare occasions the price will be fixed when there is disequilibrium, at the discretion of the chairman of the fix.
A tradition of the London Gold Fixing was that participants might raise a small Union Flag on their desk to pause proceedings. Under the telephone fixing system, participants can register a pause by saying the word "flag", and the chair ends the meeting with the phrase "There are no flags, and we're fixed".