Toastmaster of the day, Mr President, fellow toastmasters and guests – a warm good evening to you all.
Being in a foreign country comes with a different set of problems. Recently I have faced one such situation. Some of my wife’s friends polluted her mind and she has suddenly asked me to buy gold. As a dutiful husband I have checked up the price of gold here and found that it is almost the same as in India.
Unlike other metals, many of the gold ever mined is still exist in the market. Roughly around 165,000 tons of gold have been mined in the history of mankind. If you want to visualize, it will be a solid cube of size 20 meters that is about 8000 cubic meter.
We all know that gold is one important vehicle of investment as an asset class and people believe that it is much safer in times of economic turbulence and political uncertainty.
India is the single largest consumer of gold and Indians are buying 800 tons of gold annually, which is around 25% of world’s annual gold production. This includes around 400 tons of gold that is being imported into India and the balance is the reused gold.
But the biggest question is how the price is fixed? How could the price be the same in South Africa which has the major mines and in India and China, the two largest consumers of Gold? May be an interesting subject for us to know and understand.
Because most of the gold ever mined still exists and is potentially able to come on to the market for the right price, unlike most other commodities, the hoarding and disposal plays a much bigger role in affecting the price.
The Gold Fix, or the London Gold Fixing, is the procedure by which the price of gold is set on the London market by the five members of the London Gold Pool. It is designed to fix a price for settling contracts between members of the London bullion market, but, informally, the Gold Fixing provides a recognized rate that is used as a benchmark for pricing the majority of gold products throughout the world’s markets.