EVOLUTION OF GOLF FROM JEWELLERY TO TRADED COMMODITY
-Pankaj Pandey
Introduction
This article aims to explain the evolution of Gold as a medium of trade and how, over the time, Gold has changed its image as mere jewellery item to a commodity that can be traded. This article also explores both global as well as regional factors that affect the demand and supply of gold thereby affecting its prices. We also explore how gold has traversed its journey from jewellery shop to being the most traded commodity with maximum liquidity on Multi stock exchange. The end side of the article talks about recent developments with respect to Gold and what are the future outcome of Gold prices.
If google has to define gold, it will call it a yellow metal having …show more content…
Almost 95% of this gold is imported in the form of Gold bar from 8 major refiners in Switzerland, South Africa, Australia and United Kingdom. Indian Gold market can be broadly divided into two major markets i.e. jewellery market and the Investment market.
To the Indian customers, Gold as a jewellery is a store of value and a symbol of wealth and thus it has been part of many of the rituals in many of the cultures. According to Hindu culture, Gold is considered auspicious and hence we find that the demand for gold in the festive seasons like Akshaya Tritiya, Pongal, Onam, Ugadi, Durga Puja, Baisakhi increases many fold despite mounting prices. Gold as a symbol of wealth and prosperity creates a huge demand (approximately 50% of total domestic gold demand in India). Hence during marriage seasons and even a month prior to that, we observe gold price on a rise owing to higher demand. Statistics indicates that India imported close to 1000 metric tonnes of gold last year and there has been an increase of 61% in import in the month of Apr-May 2015, just prior to the month of weddings. Statistics from WGC also suggest that around 22000 tonnes of Gold is owned by Indian house\hold and 600 tonnes of gold is used every year to produce jewellery. Although the demand for Gold in the month of July-August is …show more content…
Thus it is used either in the form of Futures contracts or in the form of a hedging instrument. To understand this better, let’s take an example of a jeweller. He anticipates that Gold prices in the month of October is going to rise owing to the increased in demand during incoming Diwali season. He buys a future contract at MCX (Multi-Commodity Exchange) and locks the price in the month of August. This helps him avoid the losses in case the prices in the month of October increased. Another example could be based on the fact that even though the global gold is very volatile, the domestic gold prices do not fluctuate as often. Hence many investors use Gold as a hedging instrument to hedge their positions in currency. For this reason itself, Gold is known as “Safe Heaven” in
-Pankaj Pandey
Introduction
This article aims to explain the evolution of Gold as a medium of trade and how, over the time, Gold has changed its image as mere jewellery item to a commodity that can be traded. This article also explores both global as well as regional factors that affect the demand and supply of gold thereby affecting its prices. We also explore how gold has traversed its journey from jewellery shop to being the most traded commodity with maximum liquidity on Multi stock exchange. The end side of the article talks about recent developments with respect to Gold and what are the future outcome of Gold prices.
If google has to define gold, it will call it a yellow metal having …show more content…
Almost 95% of this gold is imported in the form of Gold bar from 8 major refiners in Switzerland, South Africa, Australia and United Kingdom. Indian Gold market can be broadly divided into two major markets i.e. jewellery market and the Investment market.
To the Indian customers, Gold as a jewellery is a store of value and a symbol of wealth and thus it has been part of many of the rituals in many of the cultures. According to Hindu culture, Gold is considered auspicious and hence we find that the demand for gold in the festive seasons like Akshaya Tritiya, Pongal, Onam, Ugadi, Durga Puja, Baisakhi increases many fold despite mounting prices. Gold as a symbol of wealth and prosperity creates a huge demand (approximately 50% of total domestic gold demand in India). Hence during marriage seasons and even a month prior to that, we observe gold price on a rise owing to higher demand. Statistics indicates that India imported close to 1000 metric tonnes of gold last year and there has been an increase of 61% in import in the month of Apr-May 2015, just prior to the month of weddings. Statistics from WGC also suggest that around 22000 tonnes of Gold is owned by Indian house\hold and 600 tonnes of gold is used every year to produce jewellery. Although the demand for Gold in the month of July-August is …show more content…
Thus it is used either in the form of Futures contracts or in the form of a hedging instrument. To understand this better, let’s take an example of a jeweller. He anticipates that Gold prices in the month of October is going to rise owing to the increased in demand during incoming Diwali season. He buys a future contract at MCX (Multi-Commodity Exchange) and locks the price in the month of August. This helps him avoid the losses in case the prices in the month of October increased. Another example could be based on the fact that even though the global gold is very volatile, the domestic gold prices do not fluctuate as often. Hence many investors use Gold as a hedging instrument to hedge their positions in currency. For this reason itself, Gold is known as “Safe Heaven” in