What is Gold?
Gold (Au) is a mineral which is the seventy-ninth element on the periodic table. Gold is one of the higher atomic numbered elements which occurs naturally. It is a slightly reddish, yellow ,mailable and soft metal .Gold , chemically is a transitional metal and a group 11 element. It is one of the least reactive chemical elements and is solid under normal temperatures and conditions . Gold is said to be extra terrestrial in origin and got to Earth during Supernova events (if you would like to learn about another valuable element which turns into Diamond click here). The valuable element is an asset to many and can be used in many different ways. Gold pricing and measurement systems help to define how much Gold costs per weight.
Gold nuggets are usually mined in various bodies of water or in mines where the tiny grains are in large deposits. The largest miner of Gold since the 1880s is currently South Africa, this country presently accounts for 22% of the World’s Gold supply. There are a few different mining techniques used to find and extract Gold.
- Placer mining- Gold that has been accumulated in a placer deposit is extracted . Placer deposits are composed of relatively loose materials which makes tunnelling difficult. Most means of extracting Gold using this method involves water or dredging.
- Hard rock mining- this is the method of extracting Gold that has been encased in hard rock, rather than extracting fragments in loose sediment.
- Panning-Gold panning is the most manual means of extracting Gold. Sand and Gravel which may contain Gold are placed in a wide, shallow pan , submerged in water and shaken , Gold is very dense and so if there are and Gold fragments present, they quickly sink to the bottom.
Gold measurement and pricing
Karat is the unit used to measure Gold. A Gold Karat is 4.1667% of the whole and the purity of a Gold alloy is expressed as the number of the parts of Gold it contains. Therefore, a metal which contains 16 parts Gold and 8 parts alloy is called a 16 Karat Gold piece. Pure Gold is considered to be 24 Karats. Gold filled jewellery has a higher Gold content and tends to last longer. The purer the quality of Gold within the jewellery, the more expensive the jewellery.
1 ounce of Gold – $ 1,878.51 USD
1 Gram of Gold -$ 60.4 USD
1 Kilo of Gold -$ 60,395.50
Gold , along with Diamond and Silver are some of the most common minerals which are used to make jewellery. Gold can be used to make a variety of Jewellery items like watches, bracelets, chains ear-rings and rings. Gold jewellery that contains Gold in its purest form is more expensive than Gold that has been combined with an alloy.
what are the best places to buy affordable Gold jewellery online?
This is arguably my favorite place to score affordable real gold jewelry online. Not only does Szul stock lots of authentic 10K and 14K gold pieces, but they also sell real diamond pieces, too. And the prices? Incredible! I’m talking less than $200 for a pair of diamond stud earrings in 10K gold. But the best part of all? Szul does promo codes so you can get their genuine gold and diamond pieces for even less!
This one may actually be a bit surprising, but here me out. Amazon really and truly does have great quality gold jewelry. Another reason I love Amazon for jewelry is they have tons of the trendy pieces for less. You know those tiny, minimalist stick studs everyone is wearing? $39 in 14K on gold Amazon! Plus, if you have Prime, they get to you crazy fast. I’m currently stalking this cool 10K double bar ring…
You may be surprised, but there are real jewelry deals to be head at Bloomies. Yes, really! Here’s my trick: head to the fine jewelry section on the website and change the sort to “low-high.” Right now, you’ll be pleasantly surprised to see there are a pair of 14K gold simple ball studs on sale for just $33. Keep scrolling and you’ll actually see there’s quite a lot of cheap gold jewelry at Bloomingdale’s; I’m talking $200 and under!
Vrai & Oro
Last but not least, I have to shout out Vrai & Oro. This is a newer, smaller brand, but they are killing it. Their pieces are simple and minimalist, but so stunning and super high quality. A few things to note: their most popular items sell out fast, so plan on coming across items that have a wait list. My advice: follow them on Instagram. This is where I keep up to date on their newest releases so I can snatch up pieces I love before they sell out.
What is the cheapest way to buy gold?
When it comes to buying gold, customers are regularly confused why they can’t purchase a gold coin or bar for the spot price. The common misconception is that the spot price of gold is just like the price of a stock; you can buy 1 share at the listed price. What people don’t realize is that the spot price is the price of the raw commodity, before it is turned into the finished product (in this case a gold bar, coin or round).
The Backyard Gold Prospector
When customers call us confused about why gold coins are more than the spot price, the most frequent example we give them is what we call “The Backyard Gold Prospector.” We tell them that if they were to go purchase some mining equipment, dig in their backyard and happen to come across one ounce of gold, that gold nugget they unearthed would be worth the spot price of gold. Now, if they want to turn that nugget into something more recognizable, like a coin or a bar they’d need to hop in their car and drive down to the refinery.
There they’d have to pay to have the gold refined. Once that was finished, they’d have to hop in their car again and take the refined metal over to the minting facility. There, they would have to pay the mint to stamp their metal into a coin or a bar. After that they’d have to take their stamped bar or coin over to the assayer to verify the purity and content of their coin or bar. Most times we don’t make it through the entire scenario before the customer realizes that paying a couple percent on top of the spot price isn’t unreasonable. Now that we’ve got that out of the way, what IS the cheapest way to buy gold?
The three most popular forms that gold bullion is sold in are coins, rounds, and bars. In the industry, we refer to the price of a gold coin in the amount over spot it is. So we may say a coin is “5% over spot” or “$30 dollars over.” For the sake of uniformity we’ll just focus on the percentage over spot.
Gold coins are going to be the most expensive way to purchase an ounce of gold. Much of this cost is in the fact that you are buying your coin from a government and most coins carry a face value. For example, a 1 ounce American Gold Eagle has a face value of $50 dollars. This means that in the worst case scenario you can sell that Gold Eagle back to the U.S. Mint for $50 dollars.
More than likely that will not happen since the price of gold is currently at $1,367.00. But with a gold coin’s higher premium, you are also paying for pedigree. In the case of a 1 ounce Canadian Gold Maple Leaf you’re getting an ounce of gold that is backed by the Canadian Government. The coin is easily recognizable, has a design by famed artist Walter Ott, has a face value of $50 dollars and has been in production since 1979.Gold coins are generally 3-5% over spot. Quantity dependent.
What Drives the Price of Gold?
Today, gold is sought after, not just for investment purposes and to make jewelry, but it is also used in the manufacturing of certain electronic and medical devices. Gold (as of March 2021) was over $1,700 per ounce, and while down more than $300 from September 2020, still up considerably from levels under $100 seen 50 years ago. What factors drive the price of this precious metal higher over time?
some key factors to consider
- Investors have long been enamored by gold and the price of the metal has increased substantially over the past 50 years.
- Like most commodities supply and demand is incredibly important, but gold also retains additional value.
- Government vaults and central banks comprise one important source of demand for the metal.
- Investment demand, especially from large ETFs, is another factor underlying the price of gold.
- Gold sometimes moves opposite to the U.S. dollar because the metal is dollar-denominated, making it a hedge against inflation.
- Supplies of gold are primarily driven by mining production, which has leveled off since 2016.
How Gold Prices Are Determined
Central Bank Reserves
Central banks hold paper currencies and gold in reserve. As the central banks diversify their monetary reserves away from the paper currencies that they’ve accumulated and into gold the price of gold typically rises. Many of the world’s nations have reserves that are composed primarily of Gold.
Bloomberg reported that global central banks have been buying the most gold since the U.S. abandoned the gold standard in 1971, with 2019 figures dipping just modestly from 2018’s 50-year record. Turkey was the largest buyer of gold in 2019, followed by Russia, Poland, and China, according to the World Gold Council. In all, governments bought a total of 650 tons of gold in 2019, down modestly from the 656 tons bought in 2018, and still near highs not seen in 50 years.
Value of the U.S. Dollar
The price of gold is generally inversely related to the value of the United States dollar because the metal is dollar-denominated. All else being equal, a stronger U.S. dollar tends to keep the price of gold lower and more controlled, while a weaker U.S. dollar is likely to drive the price of gold higher through increasing demand (because more gold can be purchased when the dollar is weaker). As a result, gold is often seen as a hedge against inflation. Inflation is when prices rise, and by the same token prices rise as the value of the dollar falls. As inflation ratchets up, so too does the price of gold.
Worldwide Jewelry and Industrial Demand
In 2019, jewelry accounted for approximately half of the gold demand, which totaled more than 4,400 tonnes, according to the World Gold Council. India, China, and the United States are large consumers of gold for jewelry in terms of volume. Another 7.5% of demand is attributed to technology and industrial uses for gold, where it is used in the manufacturing of medical devices like stents and precision electronics like GPS units. Therefore, gold prices can be affected by the basic theory of supply and demand; as demand for consumer goods such as jewelry and electronics increases, the cost of gold can rise.
During times of economic uncertainty, as seen during times of economic recession, more people turn to investing in gold because of its enduring value. Gold is often considered a “safe haven” for investors during turbulent times. When the expected or actual returns on bonds, equities, and real estate fall, the interest in gold investing can increase, driving up its price. Gold can be used as a hedge to protect against economic events like currency devaluation or inflation. In addition, gold is viewed as providing protection during periods of political instability as well.
Gold also sees demand from exchange traded funds that hold the metal and issue shares that investors can buy and sell. SPDR Gold Trust (GLD) is the largest and held over 1,078 tonnes of gold in March 2021. In all, gold purchases from various investment vehicles in 2019 were 1,271.7 tonnes, according to the World Gold Council, representing over 29% of the total demand for gold.
Major players in worldwide gold mining include China, South Africa, the United States, Australia, Russia, and Peru. The world’s gold production affects the price of gold, another example of supply meeting demand. Gold mine production was roughly 3,260 tonnes in 2018, up from 2,500 in 2010. However, despite the increase over a ten-year span, gold mining production has not changed significantly since 2016.
USGS. “Gold (2020),” Page 70. Accessed Mar. 5, 2021. One reason is that the “easy gold” has already been mined; miners now have to dig deeper to access quality gold reserves. The fact that gold is more challenging to access raises additional problems: miners are exposed to additional hazards, and the environmental impact is heightened. In short, it costs more to get less gold. These add to the costs of gold mine production, sometimes resulting in higher gold prices.
Why do people continue to invest in Gold?
We have long been, and will likely continue to be, enamored by gold. Today, the demand for gold, the amount of gold in the central bank reserves, the value of the U.S. dollar, and the desire to hold gold as a hedge against inflation and currency devaluation, all help drive the price of the precious metal.
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