Have you noticed how many people are promoting gold as a great financial investment? Why is gold so popular? What are spot gold prices?
“Buy or Sell Gold to Make a Lot of Money”… or so the hype goes.
Grandmothers are dusting off gold necklaces to sell them to pawn shops. The New York Mint is releasing gold coins seized during the Great Depression. The Chinese have opened up a new Hong Kong exchange for selling gold due to high unmet demand. All of these gold buyers and sellers depend upon the gold spot price.
Who Uses the Gold Spot Price?
Gold is Money! A nation’s wealth is oftentimes measured on how much gold bullion it has. The United States has its gold bullion in Fort Knox. Gold has always been used as a currency of exchange.
From 1933 to 1974, American citizens were forbidden to hold gold. The price was fixed at $35 per ounce. After 1974, gold spot prices became important for investment purposes. Gold has always been used for money, industry and jewelry because it is beautiful, durable and valuable.
The Spot Price Gold Standard
The gold medal is given to the best. The gold standard is the best. Gold is money. Most financial instruments – stocks, bonds and dollar bills – are paper promissary notes. They are abstract with no intrinsic value in and of themselves.
Gold is the tangible precious metal in your hands. Gold is the universal hedge. When times are difficult, the wise invest in tangible assets. Gold is still being found in Spanish ships at the bottom of the ocean. Gold outlasts most catastrophes. Gold spot prices increase during difficult times as investors seek the safety of the precious metal.
Gold has been one of the best performing assets in 2011 – going from the price of $1,421.40 on January 1, 2011 to $1,835.50 on August 30, 2011 for an increase of 29.13%. Many experts are predicting an increase in the gold spot price. Some independent investors see gold as an alternative to fiat currency – paper dollars – which are losing their value.
Spot? Price? Gold? Why The Fuss?
Gold spot prices are calculated using the bootstrapping method of using prices of currently traded securities from the cash or coupon curve. The spot curve reveals the spot price for gold. The spot date is when transactions are settled.
The three major gold exchanges are the following:
- New York
- Hong Kong
Spot gold prices have been made uniform around the globe to increase international trade. With the 24/7/365 World Wide Web, trading is ongoing, so the spot gold price is always current.
Gold is money. Some investors are investing in gold as a hedge against uncertainty. Gold’s value is determined on the open financial markets. Governments rise and fall. Gold remains valuable throughout most difficulties. Speculation using spot gold prices can make you a lot of money… but as with any investment you may lose your whole investment. Always seek advice for your personal situation before making any gold investment… regardless of spot gold prices.