It is important that they know the underlying asset in detail; the author has tried to give you What, Why, When, Where and How of gold in the following paras.
Please read a page on "Gold Trends in 2012" by the same author to get an idea as to what should be the LTV and loan per gram of gold. http://india-moneyfactory.blogspot.in/2012/01/gold-trend-in-2012.html
Higher operational risk in this business is discussed in a separate page.
What is Gold?
Gold (with atomic number 79 and atomic weight 197.2) is a “butter” yellow metal. Its melting point is 1063 oC, boiling point is 3081 oC and specific heat at 298 oK is 1.288 x 10-1 J/g.K. Its best Field Indicators are color, density, hardness, sectility, malleability and ductility.
Gold purity is measured in terms of karats and fineness. Pure gold is defined as 24 karat.
Thus, 18 karat = (18/24) th of 1000 parts = 750 fineness (parts per thousand).
Thus, 18 karat = (18/24) th of 1000 parts = 750 fineness (parts per thousand).
Why Gold?
The term gold is said by the scholars and philologists, to come from Sanskrit jvalita, derived from jval to shine. The word gold derives from the Anglo-Saxon gold, a word apparently corrupted from the Teutonic gulth glowing or shining metal. The Latin term of gold, aurum, and the earlier Sabine ausum are said to be words to early Italian origin related to aurora meaning glowing down. Another version has it that the Latin word aurum derives from the Hebrew aor meaning light. The Latin term is preserved in the chemical symbol for gold, Au, and in the terminology of its salts, aurous and auric.
Why Gold is precious?
Gold is one of the metals less active. Thus, do not suffer oxidation neither in air nor oxygen, for this reason is called noble metal. Gold is a very stubborn element when it comes to reacting to or combining with other elements.
There are very few true gold ores, besides native gold, because it forms a major part of only a few rare minerals, it is found as little more than a trace in a few others or it is alloyed to a small extent with other metals such as silver.
Gold is almost indestructible and has been used and then reused for centuries to the extent that all gold of known existence is almost equal to all the gold that has ever been mined. Gold is a great medium metal for jewelry as it never tarnishes.
Gold has intrinsic beauty and great malleability.
Gold was a global currency once and continues to be playing the similar role even in current times.
When was & Where is Gold found ?
Early references to the first discovery of gold are essentially legendary or mythical. Thus, Cadmus, the Phoenician, is said by some early writers to have discovered gold; others say that Thoas, a Taurian king, first found the precious metal in the Pangaeus Mountains in Thrace. The Chronicum Alexandrinum (A.D. 628) ascribes its discovery to Mercury (Roman god of merchandise and merchants), the son of Jupiter, or to Pisus, king of Italy, who, quitting his own country went into Egypt. Similar legends and myths concerning the initial discovery of gold are extant in the ancient literature of the Hindus (the Vedas) as well as in that of the ancient Chinese and other peoples. In fact, the discovery of the element we call gold is lost in antiquity.
The principal source of gold in primitive times was undoubtedly stream placers, although there is considerable evidence in certain gold belts (e.g., Egypt and India) that alluvial deposits, auriferous gossans, and the near surface parts of friable (oxidized) veins were mined.
The total above ground stocks of gold is estimated to be around 1, 63,000 tonnes by Gold Fields Minerals Services (GFMS) as on end of 2008. Out of this total stock, 51% is estimated to be present as jewellery, 18% as official reserves, 17% held as investment, 12% used for industrial purposes and 2% is unaccounted for.
Jewellery accounts for almost two-thirds of annual gold demand with investment and industry being the other main drivers. The total annual global demand for gold has averaged 3530 tonnes in the last three years (2005 - 2008). However, it is expected to dip slightly in 2009, owing to the sharp rise in prices.
Five countries, viz., India, China, USA, Turkey, Saudi Arabia and UAE account for above 60% of gold demand, with each market driven by a different set of socio-economic and cultural factors.
The total global mine production is relatively stable, averaging approximately 2,455 tonnes per year over the last three years. Recycling of old gold scrap and official sector sales are the other major sources of supply, which have averaged 1084 tonnes and 378 tonnes in the last three years.
South Africa has been a major gold producer since 1880s and it is estimated that about 50% of all gold ever produced has come from this nation. While, during the early 1980's it produced about 1000 tonnes, the output in 2007 dropped to just 272 tonnes.
China with a production of 276 tonnes, overtook South Africa as the world's largest gold producer in 2007 for the first time since 1905. The other major producers are USA, Australia, Russia and Peru.
How is Gold measured?
Weight Conversion Table
To Convert From- To - Multiply by
Troy Ounce- Grams- 31.1035
Grams- Troy Ounce- 0.0321507
Kilograms- Troy Ounce- 32.1507
Kilograms- Tolas- 85.755
