Daily Investment Tips

The prices of Gold move in unison with Australian dollar. Trading in Gold is just like trading in Australian dollar in many ways. As the world’s third-largest producer of gold, the Australian dollar had an 84% positive correlation with the precious metal between 1999 and 2008. Generally speaking, this means that when gold prices rise, the Australian dollar appreciates as well.

The reason is simple, all that production of Gold means foreign currency money flowing in to buy Gold. As more US dollars and Euros flows in, the Australian Dollar will rise.

An investor can take advantage of this correlation between Australian Dollar and Gold To make money.

written by Constantine Njeru \\ tags: Australian Dollar, Australian Gold, Australian Money, Buy Gold, Currency Money, Foreign Currency, Gold Dollar, Gold Prices, Positive Correlation, Precious Metal, Trading Gold, Trading In Gold, Us Dollars

Gold has swung from $328 in 2002 to over $1,400 in 2010. That rise  can be attributed to SPDR Gold Trust.

December issue of Businessweek has an article that shows the rise of gold is solely being driven by demand from ETFs.

SPDR Gold trust was created with the sole purpose of drumming up the price of Gold.

“Our primary mission was to find every button we could push to stimulate demand,” Burton, 59, said in an interview in London.

Who Benefits from the rise in Gold Price?

The Gold miners. In early 2000s the World Gold Council(a group of gold miners) were fed up with the falling price of Gold, previous attempt to stimulate demand of Gold as jewellery had failed. They came up with the idea creating a financial instrument that would drive up the price of Gold. They created SPDR Gold Trust.

The fund, SPDR Gold Trust (pronounced Spider), now holds 1,299 metric tons of gold valued at about $57 billion, more than the Swiss central bank.

Other funds have since emerged. The funds buy the physical gold and sell shares to investors.

The money flowing into these funds is what is driving the Gold frenzy.

written by Constantine Njeru \\ tags: 2000s, Attempt, Burton, Businessweek, Buy Gold, Buy Sell, Control, Financial Instrument, Frenzy, Gold Fund, Gold Jewellery, Gold Miners, Gold Price, Instrumen, Investors, London, Metric Tons, Physical Gold, Price Of Gold, Prom, Sole Purpose, Spider, Trust Fund, Trust Gold, World Gold Council

The price of Gold futures continue to shoot over the roof. One driver of the price is the recent gold purchases by India Central bank from the IMF.

The central bank of India has purchased 200 metric tonns of gold from IMF.

According to this economics time article.

India is spreading its assets which are said to be currently over-weighted with foreign currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a hedge against a falling dollar.

India is the world’s largest private gold consumer, but the government’s holding of gold as an asset is modest. Even so, the latest purchase puts it at Number 10 among the list of top 10 gold-holders in the world.

Of India’s current foreign exchange reserves of nearly $285 billion, foreign currency assets account for more than 90% ($268.3 billion), followed by gold ($10.3 billion), IMF’s Special Drawing Rights ($5.2 billion) and a reserve position in the IMF of $1.59 billion.

While India’s current gold holdings, accounting for just 3.7% of assets, are said to be historically low, buying 200 tons in addition to the 358 tons it already holds is expected to bump up the gold reserves to more than 6%.

As India, China and Brazil buy gold it means more Dollars sales. The dollar may continue sliding downward.

written by Constantine Njeru \\ tags: Bank Of India, Brazil, Buy Gold, Central Bank Of India, Currency Assets, Foreign Currency, Foreign Exchange Reserves, Gold Futures, Gold Holdings, Gold Reserves, Imf, India Central, India China, Private Gold, Reserve Position, Sovereign, Special Drawing Rights, Time Article, Tonns, Us Treasury Bonds