Monday, September 14, 2009

More about Gold

Gold as an Investment
Gold is often regarded as a crisis-resistant investment and a hedge against inflation. Rising government debt and the worldwide economic crisis are increasing the pressure on major currencies which resulted in the price of gold hitting US$1,000/oz again last week.

Gold is relatively uncorelated to Equities and Bonds. They performed well in times of uncertainties triggered by international conflicts, financial tsunami and times like now where government around the world are printing money like nobody business. Its a good diversification and its good to have 10% to 15% exposure in your overall portfolio.

I'd written about Gold in my March Posting

Sources and Production
About 40% of the gold that is mined today comes from China, the US, South Africa and Australia. China has become the world's number 1 producer of Gold. Annual output amounts to about 2,600 tons - which meants that in a period of 2 years, more gold is produced than in the one thousand years of the Middle Ages.

Gold Bullion
One delivery bullion bar (995%. fineness) contains 12.44kg (400 ounces) of gold. Gold is also made in bars of 10,20,50,100,500 and 1,000 grams, with a fineness of 999.9%. and is purchased mostly by private investors. With bars less than one kilo, the spread is higher and may occasionally amount to more than 5%.

Degree of Fineness
Historically, the fineness of gold has always been quoted in carats. 24 carats denote pure gold (fine gold). Upon introduction of the metric system, the measure for fineness was changed to "Parts per thousand". Thus a "750"hallmark on gold product means that 1,000 parts of the metal (by weight) contain 750 parts of pure Gold.

Carat - Designation - Content(Wt./atom)
24kt - Fine Gold - 999%. - 100%
22kt - Gold 916 - 916%. - 83%
20kt - Gold 833 - 833%. - 68%
18kt - Gold 750 - 750%. - 50%
14kt - Gold 585 - 585% - 38%
10kt - Gold 417 - 417% - 23%
9kt - Gold 375 - 375%. - 20%
8kt - Gold 333 - 333%. - 18%

Information summarised from magazine "Future" May09 issue

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