Gold price movement presentation slides(final)
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Transcript of Gold price movement presentation slides(final)
GOLDGROUP 1: Charles, Farah, Joanne, Pamela, Raymond, Xi
Topics• Introduction• Gold Price Movement• Gold vs. US Dollar• Gold vs. Inflation• Gold vs. Stock• QE (Quantitative Easing)• Investment Strategies• The Future of Gold Price
Introduction• Usages of Gold• Demand• Gold Production
Demand• Individual Demand
• Worldwide Central Banks Demand
- The U.S. interest rate is near zero.- Investors prefer holding and purchasing more GOLD.- i.e. Chinese citizens stocking up
- i.e. Chinese Central Banks
Three Major Purposes• Jewelry Market• Investment Purpose• Industrial Use
Worldwide Jewelry • Jewelry accounted for 54% of gold
demand, which totaled 3812 tonnes, in 2010.• Jewelry Market• India, China, & the US are the largest
consumers of gold for jewelry.
Industrial Use • Manufacturing of electronic & medical
devices.• Electronic:
• Medical devices
Electronic components made with gold are highly reliable.
i.e. Dentistry
Gold ProductionChina, South Africa, the US., Australia, the Russian Federation and Peru.
2011- China, 355 tons;- Australia: 270 tons- United States: 237 tons- Total (World): 2710 tonnes
Gold Price Movement
What factors drive the gold price?
• Current Events; Breaking News.• Devaluate USD• Others
i.e. Higher Cost of Gold Mining
Gold Price Movement
Nov Dec 11 Feb
Mar Apr
May Ju
n Jul
Aug Sep
OctNov Dec 12 Fe
bM
ar AprM
ay Jun Ju
lAug Se
pOct
0
200
400
600
800
1000
1200
1400
1600
1800
2000
-15%
-10%
-5%
0%
5%
10%
15%
20%Gold Price Movement 2011 - 2012
Gold Price
Gold Price % change
2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Gold Price (in $) 1656.12 1742.62 1673.77 1650.07 1585.5 1596.7 1593.91 1626.03 1744.45 1757.11Gold Price %
change 0.23% 5.22% -3.95% -1.42% -3.91% 0.71% -0.17% 2.02 7.28 0.73%
Why???• August 31st, US Fed hinted that more money stimulus to
come. Mr. Bernanke defended his monetary policy.• September 6th, Mr. Draghi in Europe confirmed earlier
rumors that the ECB would buy bonds of several European countries that are in trouble.
• September 7th, the unemployment figures in the US showed worse than expected results.
RESULT
Gold closed the trading session on September 7th with a solid gain of 2.7%.
How Gold Price Moved on Sept. 7th, 2012
Gold Price vs. US Dollar• The price of gold is generally inversely
related to the value of the US dollar.• Why?
Long Term 1970 - 2011
Recent 2011 – 2012
Nov Dec
11-Ja
nFe
bM
ar AprM
ay Jun Ju
lAug Se
pOct
Nov Dec
12-Ja
nFe
bM
ar AprM
ay Jun Ju
lAug Se
pOct
-10
-5
0
5
10
15
USD Index % change
Gold Price % change
US Dollar vs. Interest Rate• Real Interest Rate is positively related to
USD demand. (r = n – i; r = 0.5 in 2011)• US Federal Reserve to keep interest rates
near zero until 2014.• Interest Rate Forecast
Prediction • Predictions (Obama vs. Romney)
1. Obama Win: r keeps low; USD continues devaluating.
2. Romney Win: Ben Bernanke will be replaced. r may increase, and USD may appreciate.
• In a recent interview on GoldSilverWorlds.com, Grant Williams stated that: “The current gold price breakout looks like it has some legs at the moment. If we get QE3 during the Fed meeting next week, I expect gold to make a further run.”
Gold Price vs. Inflation• Inflation• Definition: The general rise in the price
level (rather than an increase in the money supply) and use changes in the Consumer Price Index as the measure of monthly inflation.
Gold Price vs. Inflation
11-Ja
nFe
bM
ar AprM
ay Jun Ju
lAug Se
pOct
Nov Dec
12-Ja
nFe
bM
ar AprM
ay Jun Ju
lAug Se
pOct
-10
-5
0
5
10
15
Gold Price % change
CPI % change
Gold Price and Stock Relationship
Inverse Growth Relationship
When stock goes up, investors turn to stock market which enables them to make more profits in a short time rather than a long-term investment in gold. So I assume that they are more likely to sell their gold rather than keeping it. This drives the growth of gold price down.
Monthly Growth
QE, Stock, Gold Relationship
• QE-------Stock• Stock------Gold Price• QE indirectly affect the Gold Price
QE----Quantitative Easing• Definition:BASICALLY: Printing $$
QE, Stock & Gold Price??
Hypothesis: Printing more money, as the investor gain more money, they will invest in stock as short term investment. Since they make more profit in shorter time, investors tend to sell their long term investment such as gold. The growth of gold price goes down because more people are selling gold.
Current Investment Strategies• $$ $$ • Gold and Silver
• Long term• Gold mining stocks, exchange traded fund, gold mutual fund. • Jewelry
• Catalyze the economy• Construction, resources• Mining stocks• Short-term: after QE3• Long-term: after economic recovery
• Oil, Oil-related product stocks• Housing
The Future of Gold PriceAs we are expecting inflation in 2013, the gold price will continuous to go up
Jim Rogers: “I am not selling my gold and silver … gold and silver will both go much, much higher over the course of the bull market.”
(The above quote was attributed to Jim Rogers in an October 2012 interview. Rogers has been an advocate of physical assets and commodities, including gold, throughout his investing career.)
Referencehttp://www.guardian.co.uk/business/2012/jan/25/federal-reserve-interest-rates-near-zero
http://www.forbes.com/sites/billconerly/2012/05/02/interest-rate-forecast-2012-2013/
http://goldsilverworlds.com/gold-silver-price-news/gold-price-breakout-continuing-on-september-7th-2012/
END
THANK YOU!