Dr. Ed’s
Economic
Indicators

GOLD

Release Date: Daily
Release Coverage: Month-End
Released By: N/A
Official Release: http://www.bloomberg.com/markets/commodities/cfutures.html

This index tracks the price per troy ounce of gold. Considered to be the most popular precious metal as an investment, gold provides a haven to those who would rather not keep cash. Some perceive gold as less of an investment and more of a tool to maintain value against inflation or devaluation of a currency.

About 65 percent of processed gold is used in the arts industry, mainly to make jewelry. Gold is also used in the electrical, electronic, and ceramics industries. These industrial applications have grown in recent years and now occupy an estimated 25 percent of the gold market.

WHAT DR. ED SAYS:

Gold generally is associated with the phrase "flight to quality," as it is an asset that represents security and usually stable growth with inflation. Gold is viewed as a buffer to changes in fiat currency, where devaluation in one currency should not entirely affect the value of gold elsewhere.

This index is vital for a bank that deals with mining-based businesses. However, gold prices do not only affect those strictly involved in the gold processing value chain. Price is affected by the basics of supply and demand, which is largely impacted by market stability/volatility and monetary base. Gold prices will affect the variety of industries mentioned above, and it is important to find out which industries in your market are susceptible to commodity risk.

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