CHINESE ECONOMY SLOWS SENDING STOCKS AND GOLD PRICES PLUMMETING – Yesterday the Dow Jones index dropped more than 155 points wiping out 1% off stock prices by mid-day. The NASDAQ also took a hit of more than 50 pints and the London Stock Exchange 100 was hit by a drop of over 72 points.
The downturn of China’s economic growth, forecast at 8% for the first quarter, fell short at 7.7% which resulted in stock price plummeting and gold prices dropping by 6%.
Worst hit in the slump was material and energy stocks which saw stock prices drop by as much as 3%. Things worsened as China’s demand diminished resulting in mining stocks falling by up to 13%, resulting in the price of gold falling.
Traders witnessed investor exodus from gold stocks in the early hours of trading; it had been expecting that the price of gold would rebound but as it fell further investors rushed to sell.
At one point in the early trading hours gold prices dropped by over $30 and come mid-day that figure had risen to 9% causing widespread panic. At the close of business gold prices held at $1,370 per ounce.
Other commodities, such as Oil, Copper and Silver all feel hard with oil prices dropping by as much as 3%, while silver bottomed out at a loss of 10%.
“The Fed has given the signal that there’s a possibility to reduce QE (quantitative easing), and that took a lot of trust out of gold.” Dominic Schnider, an analyst at UBS Wealth Management.
The question now is whether gold can rebound and attract investor confidence.
Gold is one of the most precious metals on earth and is costly and difficult to extract. It is also found on every continent around the world.
Since civilization began gold has been used as a form of currency dating back to 3,500 BC.
168,000 tons of gold extracted from the earth, just 34 tons per year since mining begun, or barely enough gold to turn half the Golden Gate Bridge into solid gold.
Over the century’s gold is the only commodity that has retained its value, regardless of war, famine or other disasters. Currencies, at times in history, have become worthless and yet gold remained the stable force of currency in such times.
Over the last 100 years the value of gold has risen dramatically.
Americans alone spend approximately $10 billion on gold each year, with 60% of that going on jewelry. According to some sources some $140 billion of jewelry in the U.S is never worn by its owners.
Gold is the most versatile of all the precious metals and is used in dentistry, space satellites, and is a great conductor so it is widely used in today’s electronics manufacturing.
Each of the world’s mobile phones contains about 0.001 of an ounce of gold. That may not sound like much but in the U.S alone all the cell phones carry a staggering 12 tons of gold.
The U.S Government gold reserves currently store over 8,000 tons of gold; which is approximately just 5% of the gold that has ever been mined.
India has the largest holding of gold than any other country with an estimated horde of 18,0000 tons of the gold ever mined.
World gold production extracts some 2,700 tons of gold each year. Of this amount the U.S is in 3rd place extracting some 234 tons or 8.8% of the world’s gold. In 2nd place is Australia with 270 tons or 10% and the biggest producer is China with a staggering 355 tons or 13.1% of the world’s gold supply.
Are we running out of gold? According to scientist man has already extracted 75% of the earth’s gold supply and it is estimated that there is approximately 20 years worth of gold mining left before it finally runs out. Based on the figure above that leave just 55,000 tons of gold remaining to be mined.
While the ground will eventually dry up of gold there is one source left open and that is our oceans. Scientist state that there are billions of gold molecules floating in our oceans, an estimated 15,000 tons; but as yet man has not discovered a way to extract it.