Articolo di Mezzi di Capitolo Sette (7)

Thursday, May 04, 2006
"Gold Prices Still Expected to Rise, Analysts Say" - Canadian Press

World Gold Council, in a conference, states that gold is an unusual asset because it can be considered both a commodity and a monetary asset. Indeed, due to the gold's unusual qualities, its price seems to be unaffected by other forms of investments. In whole, this article describes the liquidity of gold, and how it is traded similar to stocks in marketplaces. In order for gold prices to raise, people can invest in gold-mining companies by the means of stocks, mutual funds, and trusts. Of course, as easily as people can invest in these companies (and gold bars), as easily as these investments in the gold industry can turn back to money/cash. Since gold is a very liquid asset, many of the 15 banks that have some 30,000 tonnes of gold in central bank vaults wish to buy more gold to diversify their assets (so the items in their bank vaults would not consist solely of stacks of paper). Since gold is a very widely accepted and recognized commodity, and its large demand in marketplaces, it is generally accepted that gold is a very liquid asset.


Relation to Chapter 7 – Asset Liquidity


"UBS Investment Research expects that the gold price will rise to $630 US per ounce in three months because of renewed weakness in the U.S. dollar, and it forecasts an average 2006 gold price of $560 US per ounce"

Indeed, the demand for cash's substitutes (especially gold) have been on the rise for the past years. Many people have wished to switch from cash (money) to gold, since gold itself has an inherent value that is widely recognized by many people, whereas cash is simply a piece of paper or an electronic data entry. Primary reason for people wishing to switch to gold (or invest in gold) is because of gold's asset liquidity. Of course, if someone simply buy "gold" electronically (online transactions), then this process is not so much different from simply saving money in a bank, as they are both electronic data entries. If one wishes to own gold physically, that person has to buy gold jewelries from a local jewelries store. This "physical" gold, although still a very liquid asset, is not as liquid as "electronic gold" or stocks, though. Nevertheless, the asset liquidity of many objects is low, or unliquid, whereas the asset liquidity of gold is very liquid (and can be turned into cash easily). In whole, the primary connection between the article and Chapter 7 is the liquidity of assets.