Monday, August 8, 2011

8.7 trillion is tha value of all the gold in the world

At 1700 dollars per ounce value of all the gold ever mined (140,000 tons)is 8.7 trillion at 1700 dollars per ounce.Just in 2005 it was 1.9 trillion.That's the difference in spot price can make. For the first time platinum is priced at parity with gold 1718 dollars per ounce.
Worldwide production of platinum is 30 tons and gold is 2500 tons.Pt does not react with any chemical other than a arsenic compound while gold may react with thirty or so chemicals.

As high school student we learned properties of platinum and we used to use a very thin platinum wire on a glass rod and use it in a flame test where a compound was touched and put in a blue flame of bunsen burner.Presence of different colors i the flame would tell us the presence of different elements in the compound. Yellow color for Na(sodium) like in salt (sodium chloride)The colors in fireworks are from the different elements present in different compounds and their combustion at high temperature with use of explosive.Oh that was the wonder of chemistry in high school.You can see the whole spectrum of colors in the Wikipedia entry for Flame test.It really mesmerized a young kid in me, then.

Total value of all the gold produced every year (2500 tons) is 50 million per ton and 125 billion for all of 2500 tons.Yes world wide total gold is valued at close to nine trillion most of it as central bank reserves.It is only in the interest of govt of india to maintain a stable price of gold because of craze for gold jewelery and tradition in ritual and culture.Industrial demand for gold is low.New demand in gold from china may be reason for the current price in gold.

I nrealty gold is a dead investment .If looked historically it only appears a good investment if you compare peak price to earlier low prices.For the true comparison peak prices should be compared with peak prices.when peak prices are compared 840 dollars of late eighties it has only doubled in last 30 or so years and any investment in long term securities or treasury would have tripled the return.
If one could time the market we would be gods of investment .An investment in gold quadruppled in six years from 2005 that is realy great for investor with great vision.Then again we are talking about past.

If one needs to invest wisely old saying goes "buy low sell high"

So go and buy the qqq or the market average and with few years horizon you will make money.On the other hand if you had invested today instead of year ago you are saving your interest income for sure.Markets have been trampled and desimated.

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