The Attraction to Gold as a Valuable Commodity

Gold Trading has a long history dating thousands of years, and has been a

basis for currency for just as long. Many investors like the idea of gold trading

because it is a commodity that has intrinsic value, and will never be worth

nothing versus the dollar which is a fiat currency. Bullion is a precious metal that

has a fundamental value.

In 2005, it was estimated that the total world supply of gold was 3,859 tonnes, and the current demand was 3,754. This means there is currently a surplus of just over 100 tonnes. The largest amount held anywhere in the world is held in the underground vault at the Federal Reserve Bank in New York, which holds approximately 3% of all the gold ever mined. The second largest amount is held at the United State Bullion Depository, which is located at Fort Knox, Kentucky.

As with FOREX, or the currency market, the central banks and the International Monetary Fund (IMF) play a great role in determining the trading or spot price. The universal price is called the London Gold Fixing, and it is considered to be the benchmark for all international pricing. It is decided up twice daily, out of London, and the rate is developed between the largest 5 bullion trading companies and priced per the ounce. Prior to just recently, the all time high price was $850/ounce, and that record was set on January 21, 1980. That stayed the high price until March 17, 2008, when it hit an all-time high of $1,023.50. The all-time low was $252.90 an ounce, and that record was set on June 21, 1999