Dear readers Numismatica Ranieri, inside this blog article, we will talk about the gold and the objective of a protection of your estate after an investment of this kind. After having spoken of the story about the gold of the Bank of Italy, we continue the analysis related to the value of the gold, and the investments in this market. To discover the listing of the actual coins, gold investment managed by Numismatica Ranieri, we recommend that you check the ratings, updated daily. Good read.
The gold and the objective of a protection
The beginning of the new millennium in the financial markets will be remembered as one of the rally in the commodity. The symbol of this cavalcade of gold. After being forgotten, basically for two decades, i.e. from the beginning of the 80's until the end of the 90's, the gold comeback on the scene after the year 2000. We must not forget that in 2001 the price of the yellow metal were stationed around $ 250 an ounce, half of what is worth twenty years before. But since 2001 he started the big run-up that exactly 10 years will bring the gold to get a little over 1900 per ounce: in that decade was the best asset class by taking the returns are annualised.
What has an impact on the price
What sparked this movement? After two decades of oblivion, it definitely started a new cycle on the commodity markets. It is not a coincidence that all this has started after the burst of the internet bubble and the collapse of the shares between 2000 and 2001. In particular, if we take for example the yield of the u.s. Treasury ten-year USA in those years (above 5%) and compare it to the 2% of today we see how the returns have had a very sharp downward spiral of reflection monetary policies ever more expansive. This has been the main propellant for the commodity and, in particular, for the gold.
The yellow metal is an asset that is real and does not pay dividends, but becomes attractive when the view of real rates will compress strongly, and this is what happened until at least 2013 when the gold, all in all, he has held the positions. The prospect of low interest rates and yields that are compressed in the United States weaken the greenback.
The dollar indexthat sums up the value of the dollar against all other currencies, including the 2000 and 2002 which were traded into the area 120 points while still in 2013, it moved around 80. A deadweight loss of value of 35%, which has given a boost to the purchase of gold.
Historically, the inverse correlation between gold and the dollar is the one that works best: the salt one and down the other, and vice versa. This is explained by the fact that the gold as almost all the commodity is quoted in dollars. If the dollar goes up, I have less need as an investor to buy gold because the instrument that I have in hand increases.
On the contrary, if the dollar goes down I need to buy more gold because the instrument that I have in hand increases. On the contrary, if the dollar goes down I need to buy more gold to protect myself from the write-down and maintain my purchasing power.
Fixing
The gold is traded on a spot market and the derivatives market. The spot market for gold is the market in which you compravende physical gold with the transaction almost immediately.
It is a network of professionals who participate in the purchase and sale of precious metals. The derivatives market is realized mainly in the future, which are forward contracts with the preset deadlines. Are traded on the main financial markets, New York, for example, but thanks to the electronic platforms market is open 24 hours a day. However, there is the need on the part of insiders have prices for some during the day, and this responds to the fixing.
The fixing is no longer the ritual of a time when a small group of bankers met two times per day, between the wooden walls of an office of the N. M. Rothshild & Sons, raising flags british to approve what they thought was the “right price” of gold. Ten years ago, the discussions were already migrated on the telephone line. And since march 2015, overwhelmed by the suspicions of manipulation , the fixing has become the fruit of trading, real-world, on an electronic platform operated by Ice Benchmark Aministration (Iba) and strictly supervised by the authority of the market in the uk, the Fca.
The mechanism, however, remains to be still in the hands of a few institutions. The fixing is fixed twice a day in order to have reference values that are accepted by the international financial community. The new benchmark, the Lbma Gold Price is the result of an electronic auction, with the orders of bid and ask prices, to reach an equilibrium price is in us dollars, euro and pounds.
The demand for gold
In 2015 there have been requests for global 4.212 tons of gold, about half of the global demand concerns the jewelry (2.414 tons). China and India are two of the markets most important in the world and the news related to the consumption of these two giants have an impact on prices. The second most important chapter in the field of the application of gold is that of investment (878 tonnes), mainly thanks to the demand for bullion and physical gold investment linked to the world of Etf/Etc. The weight of the financialisation is strong, creating a vicious self-perpetuating: the more salt, the price of gold, the more it increases the demand for Etf/Etc, and vice versa.
The third entry finally, it is represented by the central banks, as anticipated with a demand of just under 600 tons: it is a voice stable in 2015, and recovery compared to previous years. Finally, there is a fourth and last entry for the demand of gold and it is the technology (330 tons): the yellow metal has significant uses in the industrial field, and especially in electronics.
The role of safe haven
The gold is associated, as a sort of unconditional reflex, the good refuge for excellence. The one tool that protects you when there are turbulences. Historically, it is true: even at the beginning of this year, with the turmoil on the stock markets, gold is the best asset class in the first quarter. Or just think of the summer of 2011, when the wave of the debt crisis in the Old Continent, the yellow metal touched a historic high.
The trend of gold is in part explained by the same factors that determine the performance of the price of other raw materials (demand, supply, characteristics of the cycle of production and extraction, the level of stocks, the phases of the economic cycle and, in particular, of the industrial sectors that use of the gold within the production cycle). But gold is not only a raw material, as in antiquity it also plays the role of currency ante litteram, and, in particular phases of the economy and financial markets to a safe haven.
What emerges is a complex that responds to the many variables and that still continues to represent a kind of thermometer of moods at the international level. In the field of investment now in the presence of gold in the portfolio has become a factor in the consolidated among small savers in recent years, with the massive intervention of the central banks on the market, is one of the few asset classes that are related with respect to the values “inflated” shares and bonds. In the early stages of turbulence has played his shelter and many of the consultants they offer to the customers provide a marginal share in the portfolio.
It is a tool which we can be exposed in many ways: by directly purchasing the raw material, ingots, and coins, or with the Etc (clones that replicate the value of the underlying metal), or by purchasing funds in equity or equity related to the extraction and production of gold. In the latter case, the prices of equity securities tend to amplify the upward or downward the dynamics of the raw material.
Let's not forget that gold is quoted in dollars and the largest listed companies are part of the extra-euro: the effect of currency is very important, therefore, on this investment.
Conclusions
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