Gold is historically connected to money and investment. It’s the one asset that has maintained its value through the ages. This has been highlighted by the global COVID-19 pandemic, which has pushed gold value and price to near-historic highs.
Top hedge fund founders are bullish on gold value and private banks are recommending that the wealthy allocate 5-10% of their portfolios to the yellow metal, according to Reuters. The Wall St. Journal reports that interest in trading is soaring and that includes trading gold.
In this article, we’ll share some interesting stats and facts about the gold value that might make you rethink this precious metal’s place in your investment portfolio.
Gold’s Fascinating History
- Astronomers believe we have the collision of neutron stars to thank for gold — and most other heavy metals — in the world. Scientists detected a powerful but brief (0.2 second) jet of gamma-rays caused by the collision using NASA’s Swift Satellite in June 2013. They estimate the amount of gold produced by the collision to be around ten times the mass of the moon.
- For almost 50 years, since the early 1970s, the production of gold and gold value has tripled annually. In the same period, gold purchases have quadrupled every year. People have different motivations for buying it. Depending on what use they have for the precious metal (jewellery, investment, technology), the motivation can be emotional, cultural, or financial.
- The early seventies also saw the end of gold’s key position in the international monetary system. Coinciding with the collapse of the Bretton Woods exchange rate system, the dollar’s convertibility into gold was suspended by US President Richard Nixon in 1971. From 1973 onwards, the currencies of members of the International Monetary Fund (IMF) could no longer be pegged to gold.
- In the first quarter of 2020, the total investment demand for gold increased by 80% (year-on-year), while consumer demand decreased by 28% This divergence of gold value was mainly due to the effects of COVID-19.
- Despite its diminishing role in the monetary system, many countries still have gold in their reserve holdings. Even the IMF is holding 2,566 metric tons of gold in its various depositories. This is 90.5 million ounces and it’s worth $161 billion at July 2020 market prices.
- The US frequently tops the list of largest gold holding countries in the world. In March 2020, more than 8,134 metric tons of gold were held by the US government. This was well over twice the size of Germany’s gold reserves and three times the size of France and Italy’s reserves.
- At the same time, a record high of 8,515 tons of gold value was being kept safe for their owners in London vaults. This is the equivalent of 681,239 gold bars valued at $440.5 billion.
- In the aftermath of September 11, 2001, terrorist attack, gold stored in the underground vaults at 4 World Trade Center was buried beneath the rubble. A total of 11.8 tons of gold, worth $103 million at the time, had to be excavated and relocated. That amount of gold is worth $675 million as of July 2020.
- By 2020, China was the world’s largest gold producer although it held only 3% of its monetary holdings as gold reserves. Australia, the second-largest gold producer, has the largest gold mine reserves, followed by Russia and South Africa.
Gold vs Bitcoin
- If you give Americans the choice between investing in gold or Bitcoin, more than 80% still choose gold. In a 2019-survey, 84.3% of the 1,500 respondents between 18 and 65+ said they’d choose $10,000 worth of gold over Bitcoin if they weren’t allowed to cash it out for 10 years. Even the majority (78%) of young people between 18 and 34 said they’d take the gold.
- Has Bitcoin joined the ranks of safe-haven assets like gold? Research by the Department of Economics of the University of Pretoria in South Africa suggests so. A paper titled Is Bitcoin the New Digital Gold? Evidence From Extreme Price Movements In Financial Markets found that Bitcoin is a hedge against uncertain times, with a “low extreme correlation between gold and Bitcoin.” However, not everyone was sold on the idea that “Bitcoin is the new gold,” citing concerns about Bitcoin’s age compared to gold and its reliance on the internet.
Additional Facts about the Gold Value
- A standard 400-troy-ounce gold bar weighs in at 27.4 pounds or 12.4 kg. Known as a “Good Delivery” bar they measure 7 inches x 3.625 inches x 1.75 inches. They are 99.5% pure gold after going through a chlorine refining process. A single bar is worth $708,000 as of July 2020. They are typically held and traded by banks and other financial institutions although anyone can purchase such a bar.
- With some operations reaching almost 4 km below the surface, AngloGold Ashanti’s Mponeng gold mine in South Africa is the deepest in the world. The mine’s depth is expected to extend further as operations expand. An estimated 46 million ounces of ore reserves are left to mine there. Around 244,000 ounces of gold were extracted in 2019.
- St Edward’s Crown, used for crowning British monarchs, is made of solid gold and weighs nearly 5 pounds (2.23 kg). The crown in its current form was first used for the coronation of Charles II in 1661 after the original 11th-century crown was melted down in 1649. It can be seen at the Tower of London where the Crown Jewels have been kept for more than 600 years.
Gold’s status among commodities as a long-term store of value is unique. It’s been treasured since ancient times and admired for its beauty and longevity. It is a symbol of success, whether worn as jewellery or kept as bullion in vaults. We’re sure some of the fascinating statistics and facts about the gold value listed above will give you a good reason to have a rethink about gold.
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