JCK’s Ultimate Guide to Gold

Posted on February 4, 2012

Gold is found in much more than just jewelry and watches. it's used in electronics, water and air purification systems, effective cancer treatments, and even home pregnancy tests.

Thanks to David Schraeder, spokesman for the World Gold Council, I got a crash course in all things gold this past week. I wanted to pass along some of the things I learned as part of this compilation of JCK’s coverage of the gold market.

Cool Facts About Gold:

• Gold has two sources of supply: mining and recycled gold.

• Mining gold has decreased of late owing to the fact that all the “easy gold” has been mined and exploration budgets to find more are going to be much more expensive. Even if a new find was discovered, it would take 5–10 years for that gold to reach the market.

• According to the WGC’s website [2], recycled gold ensures that there is “potential source of easily traded supply when needed.” As long as the metal is in a form that can be melted down, refined, and reused, it helps keep prices stable and avoid economic volatility. According to the WGC, recycled gold contributed an average 32 percent to annual supply flows between 2005 and 2009.

• Four components to gold demand: jewelry, investment, technology, and central banks.

• Central banks were once a source of supply. Once Europe and the United States abandoned the gold standard, the banks started selling stocks of gold that had been sitting in vaults. Since 1999, Central Bank Gold Agreements [3] have regulated bulk sales of gold from the world’s biggest holders of gold. The agreements eradicated the fear of unlimited selling that drove prices down and led to more stability in the market. According to the WGC, net central bank sales amounted to just 41 tons in 2009. "How many times has a source of supply become a source of demand," Schraeder asks.

• Between 400 and 500 tons of gold a year are in technology. Along with the uses I mentioned early, it is also employed extensively in dentistry, although Schraeder tells me that practice has dropped off slightly in recent years.

• There has been a shift in gold demand from the West to the East.

• China and India combine to make up 50 percent of the global demand for gold. The United States and the rest of North America make up just 13 percent of global demand.

• Women in India possess upward of 18,000 tons of gold—mainly because of India’s culture of giving gifts to women after marriage or during holidays like Diwali. To put that number is perspective, total U.S. holdings equal 8,133.5 tons.

• In 2004, the Chinese government made it legal to buy gold. Gold appealed to the Chinese because of their suspicion of the stock market. “Gold is also simple,” says Schraeder. “People can understand what it is and can store it."

• Schraeder also tells me that jewelry stores are mob scenes in China. During a trip to Beijing last spring, he was floored by the activity in the store that he visited. “It looked more like a bar in the meatpacking district of New York City,” he says. He says people were lined up at the counter shoulder-to-shoulder and that there were at least 100 attendants working throughout the store.

 

Top 10 Gold Stories From 2011:

1. Bank Predicts Gold Price Will Triple [4]
2. Talk of Gold Bubble Grows [5]
   
3. Execs Think Gold Price Will Hit Record in 2012 [6]
4. Gold Price Sees Biggest Slide in Decades [7]
5. Gold Predicted to Hit $1,900, Reaches New Record [8]
   
6. Gold Price Topping Platinum’s [9]
   
7. Gold Price Hinges on Debt Crisis, Hits New Record [10]
   
8. Banks: Gold Expected to Hit $2,000 [11]
   
9. Leading Gold Dealer Goldline International Charged With Fraud [12]
10. Gold Now Considerably More Expensive Than Platinum [13]

Other Popular Stories on Gold Prices:

• How to Navigate the Modern-Day Gold-Buying Market [14]
  [15]
• Gold Crush
  [15] [16]
• U.S. Gold Jewelry Sales Falling as Metal Price Soars [16]
  [17]
• WGC: Gold Outperformed Other Assets [17]
  [18]
• Investors Still Confident in Gold [18]
  [19]
• Gold, Silver Hit New Highs [19]
  [20]
• Americans Have $140 Billion in Unused Gold and Jewelry: Survey [20]
  [21]
• “Gold Rush” Raging On, Retailers Say [21]
  

Coverage of Conflict Gold:

• The Ethics of Gold
  [22]
• NBC Newsmagazine Takes Aim at Gold Mining [23]
  [24] [24] [24]
• World Gold Council Announces Conflict Gold Standard [24]
  [25] [25] [25]
• JCK Las Vegas: Conflict Gold Becoming Major Issue, Speakers Say [25]
  [26] [26] [26]
• SEC Wants Conflict Gold Reporting Requirements [26]

Gold Fashion:

• All That Glitters Is Gold
  [27]
• Gold: Smooch a Pooch for Charity & More
  [28] [29]
• Arkansas' Festive Red, White and Blue Celebration [29] [30] [30]
• Heather B. Moore Charms Us; Katy Briscoe Branches Out [30] [31] [31]
• Carelle Pays Tribute to Brooke Tivol McGrath [31] [32] [32]
• Terry Whyte's Local Design Contest, Pascale Bruni's Le Joli Monde Line [32] [33] [33]
• Borgezie Shoes, Frey Wille Boutiques [33] [34] [34]
• Turning Your Old Jewelry Into New Custom Designs [34] [35] [35]
• CIRCA Jewelry Buying & More [35]