Thursday, April 25, 2013

Why Gold has Remained as One of the most Valued Mediums in Trade, Commerce and the Global Economy Altogether since Ancient Times

More than 6,000 years ago archeologists learned that it was the Sumerians (modern day Iraq) who first mastered metallurgy and among the ores they’ve extracted from the ground included iron, copper, zinc, bronze, silver and gold. According to the translated writings (cuneiform) of the Sumerians it was their gods the Annunaki who demanded tons of gold from the Earth to take back to their “heavenly abode.” It would seem that the insatiable desire of the Sumerian gods for this raw material is as legendary as ours today. But what makes gold so precious that a lot of people would go through great lengths to acquire it?

Gold in History
The ancient civilizations, the Sumerians, the Assyrians, the Babylonians, Egyptians, Persians, Greeks and Romans also value gold at the highest esteem in trade and commerce among other things. Even the legendary city of Troy is said to have contained vast treasures of gold and other precious jewelry in their treasure vault and during the time of the Renaissance and all the way up to the 20th century gold is still as precious as ever. In almost every war that have ever occurred in history the victors would always carry the conquered treasures away back to their homeland, and the most valued treasure was always gold. The movies “The Three Kings” and “The A-Team” depict that in modern times and during wars some soldiers would go as far as disobeying orders just to get their hands on the precious gold bars of the countries that they have invaded. Humanity as it seems have no end to its cravings for precious Earth minerals such as gold, silver, platinum and other precious stones.

Properties of Gold
There are only few places on Earth where you can find gold, but even though it can be quite difficult to mine it from the ground; however, just 1 gram of it is worth $66.65 USD! Gold is also a very efficient electrical conductor and at the same time a very good material to use against gamma radiation and other cosmic rays, which is why NASA and other space agencies use it in spades on their satellites, space stations and rocket ships. A mid-tier heat resistant material, gold’s melting point is just a little over 1,000° Celsius or 1,832° Fahrenheit. Gold is among the few metals that is very malleable and can be molded to any shape or form and is the reason why many gold jewelry are fashioned with engravings, images and other sculptures and works of art. Gold therefore is not only an integral part of the world’s economic structure but a very useful material as well.

Uses of Gold
Gold has been known to be used in making jewelry, in coinage, bullion and backing of currencies; electronics, computers, various medical procedures, dentistry, aerospace, awards and status symbols, glass manufacturing, gold gilding and gold leaf. As technology moves forward there will surely be more requirements for gold to be used as somewhat of a core material in making scientific breakthroughs and technological development. However, gold is such an expensive material and will not be cost-efficient in terms of large scale use; therefore scientists and other experts are looking for ways to create a synthetic material that will have at least 90% of the properties of gold at 10 times cheaper and can be mass produced easily. It’s a long road ahead before we can produce synthetic gold but there’s no reason not to be optimistic.

Still in Demand and Tips the Scales in Financial Markets
When the United States was hit with national financial meltdown (which soon became known as the recession of 2008), Europe, South America, Africa, the Middle East and South East Asia followed not long after. The only countries that were least affected were Russia due to its oil exports, arms sales and in-demand aerospace industry; China because of the very large workforce it controls, raw materials and wide diplomatic ties; Australia and Canada seemed to have benefitted from the market crash but only very slightly as their economy became more favorable than that of America. Notably the only countries in the Eurozone that were least affected by the global financial crisis are France, Britain and Germany.

Germany has over $200 billion worth of gold bullion in the New York Federal Reserve Bank (currently being repatriated), which makes up 73% of the world’s gold reserves; while France has 2,435.4 tonnes of it stored in Banque De France (which is the French National Bank and the UK has a meager 310.3 tonnes of gold or roughly 16% of the world’s gold reserves. These nations represent the backbone of the European Union because of their unusually large gold reserves that can instantly turn the tables when a financial crisis strikes.

The World’s Largest Gold Mines and the Companies that Controls it
Some areas of the planet contains more gold than all the gold reserves in the world and among them include Grasberg Gold Mine, which is located in Papua – a small province in Indonesia. Freeport-McMoRan Copper & Gold Inc. owns this gold mine and estimates suggest that this site has given up more than 2,025,000 ounces of gold already and is still giving more. Meanwhile the Muruntau Gold Mine in Uzbekistan ranks as the world’s second largest gold mine producing gold in excess of 1,800,000 ounces in 2012. Navoi Mining and Metallurgical Combinat owns and controls this site primarily and have expanded their business four times over due to the amount of gold that they mine each year. The Carlin-Nevada Complex is currently the biggest gold mine in the mainland U.S. somewhere in the state of Nevada.

Newmont Mining Corp. purchased the land ownership of this are and setup a huge mining facility over it, for which this gold mine has caused their ROI (return-on-investment) to more than 3 times what they’ve put in when they were able to extract 1.735 million ounces from it back in 2010. Yanacocha Gold Mine is another gold rich site in Peru producing nearly 1.46 million ounces last year, makes it the largest gold mine in South America. The company that controls this mining facility is called Newmont Mining and Buenaventurda which is also a local company in Peru. Barrick Gold Corp. holds the Goldstrike (Betze Post) Gold Mine in another site in Nevada, USA and while it produced less than 500,000 ounces of gold compared to the Carlin-Nevada Complex; it is by no means an area with a huge gold deposits.

Veladero Gold Mine in Argentina is yet another gold mine owned and operated by Barrick Gold Corp. and it produced 1.12 million ounces of gold in the previous year. Last but not the least is the Super Pit/Kalgoorlie in Western Australia. Barrick Gold and Newmont Mining share ownership of this gold at 50-50 and this mining facility produces just a little over 788,000 ounces per year.

Gold Hoarding and Geo-Political Power
The top 6 countries that hoards tons of gold more than any other nation in the world are the United States, Germany, Italy, France, Switzerland and China. While the private organization known as the International Monetary Fund (IMF) has over 2,800 tonnes of gold in reserves and is the only other entity, aside from The World Bank, that has the capability to loan billions of dollars of funds to countries throughout the world. Five of the six countries mentioned above are prime members of the elite G8 or “Group of Eight” and the three remaining members of the G8 are Japan, the United Kingdom and the Russian Federation. Combined, the G8 is practically the center of political and military power of the world and its decision, as a body, has vast and tremendous effects on all the people of Earth.

Two of these six countries are considered as world superpowers (namely the United States and China); while the third superpower nation is Russia, but Russia also has over 900 tonnes of gold reserves and has high level financial influence on other countries too! Perhaps the only other material that is as precious as gold is oil and these six countries are major hoarders of it as well. It is quite clear that political and military power follows closely behind these gold hoarders, which also gives them vast influence over other nations and territories around the world.

Outrageous Use of Gold
However, in some cases gold is being used either foolishly or extravagantly. Apparently some people have more than what they need and in order to make up for their melancholic lifestyle they do outrageous things. Take for instance the Sultan of Brunei Hassanal Bolkiah, although it’s more of monarchial right and not outright extravagance, he has gold and silver kitchenware, a car inlaid with gold and gold ornaments on his royal clothing. He has 1,788 rooms with some furnished in gold and diamond-encrusted beds, walls, doors and other things that you can find inside the room. According to the people who have been a guest of the Sultan they counted approximately 257 bathrooms that are inlaid with gold and silver in his huge palace that have most of its places been gold gilding and leafing.

Another strange use of gold is that it is taken as a food supplement and the Japanese, Indians and Egyptians are known to follow this practice. However, science hasn’t confirmed yet whether or not gold has properties that enhances human health but it is highly unlikely that medical experts will even try. Some beauty products are half the bluff they promised but a beauty center in China called “Umosen” backs up their promises with genuine 24-karat gold dust! There’s a good chance that you will look a little better with their add-ons and retouch but while other women will brag about a $200 re-bond for their hair, you’ll have the most expensive beauty cream of all courtesy of Umosen.

But the most outrageous (future) use of gold was suggested by NASA and it is this: according to one NASA official using fine gold dust mixed with other chemicals to keep it suspended indefinitely in the upper atmosphere could solve the global warming effects and future climate change. It will also be a significant factor in shielding Earth’s atmosphere from harmful space radiation or cosmic rays; that is of course assuming the Earth’s atmosphere will keep on depleting as it currently does now. These are just a few examples of how gold can be used in lots of unusual ways.

Gold and the Stock Market
Gold has remained a valuable (if not THE most valuable) trading commodity to leverage against by investors. Even owning just a few hundred pounds of it could become a long-term bliss for anyone who’ll want to have a business portfolio and shares in the stock market. The over/under of the share value of gold in financial markets are unshakable and it is more likely that you will win more money than lose if you have shares in gold. While oil shares are the most aggressive assets in forex gold can be depicted as a huge cruise ship that can handle the storm’s beating in open waters. So if you want fast pace profits then you buy Exxon Mobil, Shell or Caltex shares but for a long-term and steady investment you purchase gold shares.

Purchasing and Selling Gold Shares
There’s very little difference when you talk about considering buying or selling your gold shares depending on stock market forecasts. If you can predict the outcome of the stock market by yourself then the better, at least you won’t have to pay hundreds of dollars on the opinions of market analysts. Still predicting when a certain share will go up or go down a couple of points can be a daunting task and even at the behest of super computers, the fact that irrational decisions that humans make can still render the cutting-edge in computer technology ineffective in predicting accurate market forecast. Gut feeling and quick thinking usually works best especially if you have years of experience in making portfolio investments, but as they always say two minds are better than one. So try to get as much tips as you can and make lots of friends and connections so your chances in making profits with your gold shares will be better.

Why you should Own Gold
Even in small amounts gold can come in handy whenever you’re in need like when you need cash badly, you can pawn your gold jewelry to a pawnshop for some cash. Or you can buy gold in larger amounts and store it in a bank and buy bank shares to get monthly payouts, or turn it into a long-term deposit and profit just as much. The same principle can be applied in financial markets where you get to play with the big boys on bigger stakes. Having a valuable commodity in your storehouse like gold is a very smart move and a worthy investment too!

Will Gold still be a Vital Economic Substance in the Distant Future?
This question is vague and at times a disadvantage to answer; however, futurists gave us a clue of what the future of nations and territories would be like. For instance the IMF (International Monetary Fund) is now suggesting that the whole world adapt to “electronic currency,” meaning no more mint coins, paper money, bear bonds or credit cards. It is likely that you will be implanted with an RFID chip which will authenticate your DNA in order to allow you to make electronic transactions – just like the introduction of the RFID chip that came along with the Obamacare. It’s practically a cashless society and most people will wonder what value will gold and other precious metals have once this will happen (and it is likely to happen probably 50 years from now).

While gold may lose its financial value in the future it may still play a vital role in other things (i.e. electronics, computers, aerospace etc. etc.), but it could also be considered as relics once scientists will discover a substitute for gold. Perhaps in that kind of future people will not have to kill each other for gold as society will use electronic cash instead of paper money or credit cards. One expert suggested that we will soon be creating our raw materials because we will have mastered the reason behind the process of how Mother Nature makes these elements.

Over the millennia and across seas and continents gold will always be valuable to everyone everywhere. People buy it for a lot of reasons from monetary needs to fashion fetish while nations cling to it for geo-political power and maintain a status quo. Regardless of ideals, religion, race or creed almost every person on this planet holds certain value in his mind and heart about gold. A Buddhist monk could see gold as something of a medium for purification while a goldsmith sees it as a wonderful jewelry, but even with the vast difference of how people value gold it can only be summed up in one word and that is “precious.” 

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