Gold is a good portfolio diversifier, because changes in the price of gold do not correlate with changes in the price of other financial assets.
We can't find the price of gold based on analysing demand and supply rules because gold is not like consuming goods. gold valuation is like stock valuation in capital markets and it is based on investors expectation of financial crisis and decrease in value of international currencies.
Top 10 gold-producing countries: 1) China 2) Australia 3) U.S 4) South Africa 5) Russia 6) Peru 7) Ghana 8) Canada 9) Indonesia10) Mexico (here news are important for these countries especially news about mining disruptions,workers strike , new projects and new sources ).
Gold can be used as a hedge against currency weakness because it typically has an inverse relationship to the U.S dollar.
2/3 of gold is accounted for the commodity component(50% jewelry , 10-15% industrial section) and 1/3 split between investing and government sector (investment demand has been highly variable over time).
Top 3 gold-consumer :1) China 2) India 3) U.S (so fetes are important for these countries except U.S.A and also import policy).
Inflation in monetary system in world level increase gold price.
Trust on banking system decrease gold price.
Gold is an important commodity in crisis.
Gold had been strongly affected by U.S monetary policies (like quantitative easing).
In last 44 years ago in December gold price averagely increased and in Mars averagely decreased.
Some reasons which cause gold hit 1900$/ounce : 1) quantitative easing(Q3) 2) United States budget deficit 3) decrease in United States economic growth 4) United States trade balance deficit ............. so you can see every thing in gold depends on United States.
In FOREX market trading gold is dangerous especially for low capitals because gold is a fluctuating asset and waves eat your capital easily.
Gold is known as a safe-heaven asset during history but you must consider these tips: 1) unlike stocks, gold has no dividends 2) it has been seen that gold had negative return in short term , even when we had inflation 3) there is cost for keeping gold safely and also insurance costs.
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