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Rank Country GDP - per capita (PPP) (US$)
1 Liechtenstein 141,100
2 Qatar 104,300
3 Luxembourg 81,100
4 Bermuda 69,900
5 Monaco 63,400
6 Singapore 60,500
7 Jersey 57,0008
Falkland Islands(Islas Malvinas)
55,400
9 Norway 54,200
10 Brunei 50,000
11 Hong Kong 49,800
12 United States 49,000
13United ArabEmirates
48,800
14 Guernsey 44,600
15 Switzerland 43,900
16 Cayman Islands
43,80017 Gibraltar 43,000
18 Netherlands 42,700
19 Austria 42,400
20 Kuwait 42,200
As on January 1, 2012
India 3876
By Arvind SubramanianFor the past three decades, the Indian economy has grown impressively, at an average annualrate of 6.4 per cent. From 2002 to 2011, when the average rate was 7.7 per cent, India seemedto be closing in on China - unstoppable, and engaged in a second "tryst with destiny," to borrow
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Jawaharlal Nehru's phrase.The economic potential of its vast population, expected to be the world's largest by the middle ofthe next decade, appeared to be unleashed as India jettisoned the stifling central planning andeconomic controls bequeathed it by Nehru and the nation's other socialist founders.
But India's self-confidence has been shaken. Growth has slowed to 4.4 per cent a year; the
rupee is in free fall, resulting in higher prices for imported goods; and the specter of a potentialcrisis, brought on by rising inflation and crippling budget deficits, looms.
To some extent, India has been just another victim of the ebb and flow of global finance, which itembraced too enthusiastically. The threat (or promise) of tighter monetary policies at theFederal Reserve and a resurgent American economy threaten to suck capital, and economicdynamism, out of many emerging market economies.
But India's problems have deep and stubborn origins of the country's own making.
The current government, which took office in 2004, has made two fundamental errors. First, it
assumed that growth was on autopilot and failed to address serious structural problems.Second, flush with revenues, it began major redistribution programs, neglecting theirconsequences: higher fiscal and trade deficits.
Structural problems were inherent in India's unusual model of economic development, whichrelied on a limited pool of skilled labour rather than an abundant supply of cheap, unskilled,semi-literate labour. This meant that India specialized in call centers, writing software forEuropean companies and providing back-office services for American health insurers and lawfirms and the like, rather than in a manufacturing model. Other economies that have developedsuccessfully - Taiwan, Singapore, South Korea and China - relied in their early years on
manufacturing, which provided more jobs for the poor.
Two decades of double-digit growth in pay for skilled labour have caused wages to rise andhave chipped away at India's competitive advantage. Countries like the Philippines haveemerged as attractive alternatives for outsourcing. India's higher-education system is notgenerating enough talent to meet the demand for higher skills. Worst of all, India is failing tomake full use of the estimated one million low-skilled workers who enter the job market everymonth.
Manufacturing requires transparent rules and reliable infrastructure. India is deficient in both.High-profile scandals over the allocation of mobile broadband spectrum, coal and land have
undermined confidence in the government.
If land cannot be easily acquired and coal supplies easily guaranteed, the private sector will shyaway from investing in the power grid. Irregular electricity holds back investments in factories.
India's panoply of regulations, including inflexible labour laws, discourages companies fromexpanding. As they grow, large Indian businesses prefer to substitute machines for unskilledlabour. During China's three-decade boom (1978-2010), manufacturing accounted for about 34per cent of China's economy. In India, this number peaked at 17 per cent in 1995 and is nowaround 14 per cent.
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In fairness, poverty has sharply declined over the last three decades, to about 20 per cent fromaround 50 per cent. But since the greatest beneficiaries were the highly skilled and talented, theIndian public has demanded that growth be more inclusive. Democratic and competitive politicshave compelled politicians to address this challenge, and revenues from buoyant growthprovided the means to do so.
Thus, India provided guarantees of rural employment and kept up subsidies to the poor for
food, power, fuel and fertilizer. The subsidies consume as much as 2.7 per cent of grossdomestic product, but corruption and inefficient administration have meant that the most needyoften don't reap the benefits.
Meanwhile, rural subsidies have pushed up wages, contributing to double-digit inflation. India'sfiscal deficit amounts to about 9 per cent of gross domestic product (compared with structuraldeficits of around 2.5 per cent in the United States and 1.9 per cent in the European Union). Tohedge against inflation and general uncertainty, consumers have furiously acquired gold,rendering the country reliant on foreign capital to finance its trade deficit.
At a news conference last week, India's harassed finance minister, P.
Chidambaram, addressed the issue of the rising current account deficit and the fall
of the rupeeagainst the dollar. His message to his countrymen:Please stop buying
so much gold.
Chidambaram has a point. India is the world's biggest consumer of gold, accounting
for a little more than one-third of world demand. Traditionally, gold in India has
served a double purpose of consumption (it's often the single biggest expense at a
wedding) and investment, because it is seen as a more reliable hedge against
inflation than savings in financial instruments. Urban and rural Indians differ in their
habits in many other spheres, but they are united in their trust in gold. A recent
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report showed that gold accounted for as much as10 percentof total household
savings in 2011.
Enlarge image
Gold necklaces sit in a window display at a Dhanraj Jewelers store in Mumbai. India this month increased a tax on gold
imports as it tries to curb demand for the metal thats contributed to the current -account gap and hurt the currency.
Photographer: Dhiraj Singh/Bloomberg
Unfortunately, almost no gold is produced domestically, and so rising demand for
the precious commodity severely affects the balance of payments. Gold is now the
second-largest expense on India'simport bill, after crude oil. One would have
thought that rising gold prices -- a jump of more500 percentsince 2000 -- would
have had the effect of curbing demand, but that's not been the case. As this graph
shows, India's demand for gold remained between 550 and 800 metric tons annually
from 1997 to 2009, even as prices kept going up.
Here's a market, then, that appears to be price inelastic -- but apparently only when
prices are rising. When prices fellto a two-year lowin April, gold demand shot up to
record levels, with monthly imports averaging152 tonsin the first two months of the
new fiscal year, more than twice the monthly average of 70 tons from the previous
year. To suppress demand, the government has already raised the import duty on
gold twice this year, from 4 percent to 6 percent in January and then from 6 percent
to 8 percentin June. Last week, Chidambaram delivereda small homilyon gold that
was part economics lesson, part supplication:
On gold, I am happy that all my appeals are being heeded partly by the people of
India.... Net gold imports averaged 135 million dollars a day in the first 13 business
days of May.... However, in the subsequent 14 business days, it averaged only 36
million dollars. So gold imports have sharply come down, but I would be happy if
they come down even further. I continue to hope and dream. Suppose we stop gold
imports ... suppose the people of India don't demand gold and we don't have to
import gold for one year ... the whole situation will so dramatically change.
People who want to buy gold must realize that every ounce of gold is imported --
every ounce. No gold is manufactured in India. You pay rupees, we have to provide
the dollars. You think you are buying gold in rupees but actually you are buying gold
in dollars. I would once again appeal to everyone: please resist the temptation to
http://goldnews.bullionvault.com/buying-gold-061820125http://goldnews.bullionvault.com/buying-gold-061820125http://goldnews.bullionvault.com/buying-gold-061820125http://www.bloomberg.com/photo/india-can-take-more-steps-to-temper-gold-imports-/337138.htmlhttp://www.bloomberg.com/photo/india-can-take-more-steps-to-temper-gold-imports-/337138.htmlhttp://www.business-standard.com/newsimgfiles/2012/june/29062012/062912_36.jpghttp://www.business-standard.com/newsimgfiles/2012/june/29062012/062912_36.jpghttp://www.business-standard.com/newsimgfiles/2012/june/29062012/062912_36.jpghttp://articles.economictimes.indiatimes.com/2013-05-07/news/39091149_1_commodity-prices-copper-prices-commodity-supercyclehttp://articles.economictimes.indiatimes.com/2013-05-07/news/39091149_1_commodity-prices-copper-prices-commodity-supercyclehttp://articles.economictimes.indiatimes.com/2013-05-07/news/39091149_1_commodity-prices-copper-prices-commodity-supercyclehttp://graphics.thomsonreuters.com/119/IN_GLD1109.gifhttp://graphics.thomsonreuters.com/119/IN_GLD1109.gifhttp://graphics.thomsonreuters.com/119/IN_GLD1109.gifhttp://graphics.thomsonreuters.com/119/IN_GLD1109.gifhttp://www.bloomberg.com/news/2013-05-29/gold-demand-in-india-heads-for-quarterly-record-after-price-drop.htmlhttp://www.bloomberg.com/news/2013-05-29/gold-demand-in-india-heads-for-quarterly-record-after-price-drop.htmlhttp://www.bloomberg.com/news/2013-05-29/gold-demand-in-india-heads-for-quarterly-record-after-price-drop.htmlhttp://www.bullionstreet.com/news/india-may-take-more-steps-to-curb-gold-imports-raghuram-rajan/4967http://www.bullionstreet.com/news/india-may-take-more-steps-to-curb-gold-imports-raghuram-rajan/4967http://www.bullionstreet.com/news/india-may-take-more-steps-to-curb-gold-imports-raghuram-rajan/4967http://in.reuters.com/article/2013/06/05/india-gold-import-duty-idINDEE9540DG20130605http://in.reuters.com/article/2013/06/05/india-gold-import-duty-idINDEE9540DG20130605http://in.reuters.com/article/2013/06/05/india-gold-import-duty-idINDEE9540DG20130605http://www.moneycontrol.com/news/economy/please-dont-buy-gold-for-one-year-chidambaram_897982.htmlhttp://www.moneycontrol.com/news/economy/please-dont-buy-gold-for-one-year-chidambaram_897982.htmlhttp://www.moneycontrol.com/news/economy/please-dont-buy-gold-for-one-year-chidambaram_897982.htmlhttp://www.bloomberg.com/photo/india-can-take-more-steps-to-temper-gold-imports-/337138.htmlhttp://www.moneycontrol.com/news/economy/please-dont-buy-gold-for-one-year-chidambaram_897982.htmlhttp://in.reuters.com/article/2013/06/05/india-gold-import-duty-idINDEE9540DG20130605http://www.bullionstreet.com/news/india-may-take-more-steps-to-curb-gold-imports-raghuram-rajan/4967http://www.bloomberg.com/news/2013-05-29/gold-demand-in-india-heads-for-quarterly-record-after-price-drop.htmlhttp://graphics.thomsonreuters.com/119/IN_GLD1109.gifhttp://graphics.thomsonreuters.com/119/IN_GLD1109.gifhttp://articles.economictimes.indiatimes.com/2013-05-07/news/39091149_1_commodity-prices-copper-prices-commodity-supercyclehttp://www.business-standard.com/newsimgfiles/2012/june/29062012/062912_36.jpghttp://www.bloomberg.com/photo/india-can-take-more-steps-to-temper-gold-imports-/337138.htmlhttp://goldnews.bullionvault.com/buying-gold-061820125 -
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buy gold. If we can have it for six months, one year ... it will dramatically change the
situationof the current account deficit, and you will see its positive impact on every
other index that measures the economy: stock market, exchange rate, interest rates.
Chidambaram is right, asthis graphcalculating India's trade deficits with and without
gold demonstrates. He is by no means the first finance minister to try and persuade
his countrymen not to park their money into gold. Last year, his predecessor Pranab
Mukherjee, was quoted assayingthat the:
Quantum of import of gold ... is a clear indication (that) large section of community ...
want investment in dead asset only with expectation that value would appreciate....
Time is ripe to motivate our educated upper middle class to climb from saving mode
to wealth generation mode.
This is, however, a long-term project. India's gold-buying culture is deeply
entrenched. As Leif Eskesen, chief economist for India and Southeast Asia at HSBCHoldings Plc, wrote in his report"India Perspectives: The Love Affair With
Gold"published earlier this year:
Gold imports have always been high in India, which has left Indian households
collectively holding no less than 20,000 tonnes of gold, according to the World Gold
Council. At current prices that works out to USD4,500 worth of gold per household.
Arguing that investing in gold was for many Indians a perfectly logical decision,
Monika Halanwrotein the business newspaper Mint:
I hold the view that the Indian household makes a sensible decision to hoard gold. It
is sensible because access to financial assets remains difficult and where access is
easy, the regulatory failure to stop large-scale cheating of retail investors ... has
broken the fledgling faith in markets for the average investor. Regulatory and
institutional failure is the reason people hoard gold and not because they are stupid.
And as the country looks more and more unstable, we buy more and more gold
perfectly logical and rational. This is no different than industrialists moving their
business overseas and the rich buying real estate and stock abroad.
As the late Indian economist IG Patel, whowrote extensivelyin the 1950s on India's
gold obsession and ways in which to mobilize the hoarded wealth,once said: In
prosperity as in the hour of need, the thoughts of most Indians turn to gold. The
evidence from the last few years suggests that when steeply rising prices, and a
debilitating current account deficit that raises the cost of other goods, come up
against a powerfully entrenched cultural reflex, it's not always the laws of economics
that win out.
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(Chandrahas Choudhury, a novelist, is the New Delhi correspondent forWorld View.
Follow him onTwitter. The opinions expressed are his own.)
Why do Indians buy gold?Submitted byMisha Sharma
India is one of the biggest markets for gold and gold loans. Reasons for this are
spread across various social, economic and cultural dimensions. According to World
Gold Council, India accounts for 10% of total world gold stock, of which rural India
accounts for 65% of the total gold stock. For Indians, gold is not just a commodity,
but an auspicious metal that they buy for various purposes on different occasions.
There has always been a high demand for gold in India, irrespective of prices. During
2001- 2012, the annual demand for gold remained relatively stable at around 700 to
900 tonnes despite constant rise in prices during the last ten years[1].
In a recently concluded CMF research project, we attempt to understand
the characteristics and behaviors of the various stakeholders involved in the gold
loan market through a survey methodology. This post highlights one of the
interesting findings from our preliminary analysis of the data. In order to gauge
peoples perception about gold, we asked respondents their motive behind
buying gold. Following figure provides a snapshot of the various reasons people
cite for buying gold.
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As observed, 31% of respondents buy gold for use during emergency situations.
This is because gold loans are easily available with minimal procedural
requirements. Gold is also considered as one of the most liquid assets, since it
can be easily converted back to cash and hence the resale value of gold is quitehigh compared to other types of asset. The second most common reason for
buying gold is that gold has a very high traditional value in India. This includes
buying gold during festivals, marriages, etc. There are various festivals in India
during which buying gold is considered auspicious. This is true especially in the
case of South India where people are gripped with what we can call a gold
mania.
20% of respondents save in the form of gold. This is indeed a prudent decision as
the value of gold has seen an upward trend over the last few years. Therefore,Indians prefer investing and saving in the form of gold, as gold is considered to
be a safe asset. Lastly, a total of 19% of the sample size cites buying gold for
marriage purposes. To give you further insight on this, following is an
observation from one of our field visit while administering the gold
questionnaire:
Surveyor: Do you often buy gold?
Respondent: No
Surveyor: Any specific reason, why you dont show much interest in buying gold?
Respondent: I have two boy children and so I dont care! If I had a girl child, I would
start accumulating gold from the minute she was born. Guess I am lucky.
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The above anecdote reflects societys attitude towards importance of gold in
marriages. Low income households face extreme societal pressure to buy gold in
spite of their economic barriers.
Whether Indians are emotionally attached to accumulating/buying gold is an
interesting question to investigate. Historically, Indians have expressed great
emotional attachment to their gold, which is one of the primary reasons for aflourishing Indian gold-loan market. However off late, the industry has witnessed
increasing defaults on gold loans, due to decrease in prices of gold. This reflects
peoples changing perception about gold. Indians have proved to be smart
investors and consider gold as a medium to save, invest, hedge against inflation
and most importantly to safeguard their future.
Therefore, in spite of Finance Minister Chidambarams constant plea to contain
uncontrolled passion for gold the demand for gold in India is sky high.
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Golden facts
aboutGOLD
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Numbers and factsSome of the more extraordinary statistics which gold has accumulated across the centuries and around
the world.
The atomic number of gold, which means there are 79 protons in the nucleus of every atom of gold.
The 40,000 miners who joined the California Gold Rush in 1849 were called 49ers. Only a very few ever
got rich.
One ounce of gold can be stretched to a length of 50 miles; the resulting wire would be just five microns
wide.
Million - the number of times that all of the existing gold in the world, turned into 5 micron wire, could wraparound the planet.
One ounce of pure gold could be hammered into a single sheet nine metres square.
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Gold melts at 1064 degrees centigrade.
...And only boils at 2808 degrees centigrade.
This is the total number of tonnes of gold mined since the beginning of civilisation.
... all of which would fit into a crate of 21 metres cubed.
Over 90 percent of the worlds gold has been mined since the California Gold Rush.
million people worldwide depend on gold mining for their livelihood.
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The number of grams in a troy ounce of gold.
The number of troy ounces in a London Good Delivery Bar.
Julius Caesar gave two hundred gold coins to each of his soldiers from the spoils of war in defeating
Gaul.
Fort Knox holds 4,600 tonnes of gold.
And the US Federal Reserve holds 6,200.
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The temperature of the human body is 37 degrees centigrade. Because of golds unique conductivity,
gold jewellery rapidly matches your bodys heat, becoming part of you.
It is rarer to find a one ounce nugget of gold than a five carat diamond.
The percentage of gold mined today that becomes jewellery.
The % increase in the price of gold from Dec 2000 to March 2013.
The number of parts per thousand of pure gold in 18 carat gold.
In 95 BC, Chinese Emperor Hsiao Wu I minted gold commemorative piece to celebrate the sighting of a
unicorn.
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The largest gold coin ever minted, a 2007 Canadian $1,000,000 Maple Leaf is 53cm in diameter.
Howard Carter made his famous tiny breach of the top left hand corner of the doorway to reveal the first
glimpse of Tutankhamuns tomb on 26 November 1922.
Even at only 10 parts of gold per quadrillion, the worlds oceans are estimated to hold up to 15,000
tonnes of gold.
The largest ever true gold nugget weighted 2316 troy ounces when found at Moliagul in Australia in 1869.
It was called the Welcome Stranger.
In March 2013, the SPDR Gold Shares (GLD) fund, a World Gold Council sponsored exchange traded
fund, held around US$63 billion assets under management.'
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HeritageDespite its unrivalled properties, gold is an inert material. It does nothing until man discovers it, mines and
refines it and bends it to his will. So the history of gold is very much the history of civilisation. Here are
some points in time where that history was made.
Click on the images to enlarge
c. 3600 BCFirst smel t ing of gold
Egyptian goldsmiths carry out the first melting or fusing of ores in order to separate the metals inside.
They use blowpipes made from fire-resistant clay to heat the smelting furnace.
2600 BCEarly gold jewellery
Goldsmiths of ancient Mesopotamia (modern-day Iraq) craft one of the earliest pieces of gold jewellery, a
burial headdress of lapis and carnelian beads with willow leaf-shaped gold pendants.Image Trustees of The British Museum
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1200-1500 BCAdv ances in jewellery making
Artisans develop the lost-wax jewellery casting technique. The process allows for improved hardness and
colour variation which in turn broadens the market for gold products.
1223 BCCreation of Tutankh amun's fun eral mask
Instantly recognised the world over, the funeral mask of Tutankhamun is a triumph of gold craftsmanship
from the ancient world.
950 BCSolomon bui lds gold temple
The Queen of Sheba from Yemen presents King Solomon of Israel with 2,500 kilos of gold, bringing the
contents of his treasury to 5,700 kilos. Solomon uses part of his holdings to construct his famed temple,
allegedly overlaid with gold. Nir Levy
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600 BCFirst gold dentistry practiced
The first use of gold in dentistry as the Etruscans begin securing substitute teeth with gold wire. Bio-
compatibility, malleability and corrosion resistance still make gold valuable in dental applications.
564 BCFirst international gold c urrency c reated
King Croesus develops improved gold refining techniques, permitting him to mint the world's first
standardised gold currency. Their uniform gold content allows 'Croesids' to become universally
recognised and traded with confidence.
300First gold nanopart icles
The Romans use gold to colour the Lycurgus Cup. Melting gold powder into glass diffuses gold
nanoparticles throughout which then refract light, giving the glass a luminous red glow.Image Trustees of The British Museum
1300Hallmarking practice establ ished
The world's first hallmarking system, scrutinising and guaranteeing the quality of precious metal, is
established at Goldsmith's Hall in London - where London's Assay Office is still located today.Image The Assay office, Birmingham
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1717UK gold s tandard comm ences
Britain moves onto a de facto pure gold standard, as the government links the currency to gold at a fixed
rate (establishing a mint price of 77 shillings, ten and a half pennies per ounce of gold).
1803First gold electroplating practiced
The first recorded experiment in electroplating is carried out by Professor Luigi Brugnatelli at the
University of Pavia. Gold electroplating ensures improved conductivity, now essential to many 21st
century technologies.Image Deep Blue,CC-BY-SA-3.0,Wikimedia Commons
1848Cali fornia Gold Rush b egins
John Marshall discovers gold flakes while building a sawmill near Sacramento, California. The greatest
gold rush of all time follows as 40,000 diggers flock to California from around the World.
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1885South Afr ican Gold Rush begins
While digging up stones to build a house, Australian miner George Harrison finds gold ore on Langlaagte
farm near Johannesburg. Miners flock to the region. South Africa will go on to become the source of 40%
of the world's gold.Image Terry Davis
1885First Faberge Easter egg crafted
Carl Faberge makes his first gold Imperial Easter Egg for Tsar Alexander III. Named The Hen Egg, it was
commissioned as a gift from the Tsar to his wife, the Empress Maria Fedorovna, beginning a tradition that
lasts until 1917.Image PetarM,CC-BY-SA-3.0,Wikimedia Commons,
1870-1900Adop t ion of gold standard
All major countries other than China switch to the gold standard, linking their currencies to gold. The
practice of bimetallism is abandoned.
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1925Gold standard returns
The UK returns to the gold standard at pre-war parity of $4.86=1 with sterling convertible to gold at 77sh
10.5d per standard ounce. This follows the country's departure from the gold standard six years
previously at the outbreak of World War I.
1933Roosevel t suspends gold
President Roosevelt suspends US dollar convertibility to gold (gold at US$20.67/oz). The export of all
transactions in, and the holding of gold by private individuals, is forbidden. Presidential proclamation
makes the dollar convertible again in January 1934 at a new price of $35 per troy ounce.
1939World War II closes gold market
The London gold market is closed on the outbreak of war, as at the beginning of World War II. The world
will later return to a fixed system of exchange rates, this time with currencies fixed to the dollar and the
dollar convertible into gold.
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1944Bretton Woods conference
The Bretton Woods conference sets the basis of the post-war monetary system. The US dollar is set to
maintain a $35=1 oz gold conversion rate. Other currencies are fixed in terms of US dollar, thus forming a
Gold Exchange Standard.
1961First gold bonded microchips
Gold bonding wire is used in microchips engineered at Bell Labs in the US. Nowadays literally billions of
chips are bonded this way every year, controlling all manner of indispensible electrical devices.
1961First gold in space
The first manned space flight uses gold to protect sensitive instruments from radiation. In 1980, 41kgs of
gold is included in space shuttle construction through brazing alloys, fuel cell fabrication and electrical
contacts.
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1967First South Afr ican Krugerrand
The Krugerrand is introduced in 1967, as a vehicle for private ownership of gold. This iconic coin is
actually intended for circulation as currency.
1971Gold window closed
The Bretton Woods system of fixed exchange rates comes to an end as President Nixon "closes the gold
window", suspending US dollar convertibility to gold. The world enters its present day system of floating
exchange rates.
1985First gold -based arthr i t is treatment
Pharmaceutical giant, SmithKline & French, develops Auranofin, a gold-based drug for the treatment of
rheumatoid arthritis. The drug receives regulatory approval and goes on sale for the first time.
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1999First Central Bank Gold A greement
The First Central Bank Gold Agreement (CBGA) is agreed. 15 European central banks declare that gold
will remain an important element of their reserves and collectively cap gold sales at 400 tonnes per year
over next five years.
2001First gold us ed in heart surgery
Boston Scientific markets the first gold-plated stent (Niroyal) used in heart surgery. Inserted inside large
arteries and veins, such stents act like scaffolding, propping open the blood vessels to allow adequate
flow.Image Richard Lee
2003K-gold launched in China
The World Gold Council creates an entirely new market segment with the launch of K-gold, the first 18k
jewellery in China. The jewellery, in predominantly white and yellow gold, takes its inspiration from Italian
design.
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2004Launch o f SPDR
Gold Shares
The market is transformed by an innovative, secure and easy way to access the gold market. Six years
later SPDR exceeds $55bn in assets under management.
2009Central banks return to bu ying
In the second quarter of the year, central banks collectively become net purchasers of gold for the first
time in two decades. This reflects a combination of slowing sales from European banks and growing
purchases by emerging market countries.Image National Geographic
2010Gold pr ice susta ins record highs
Fiat currencies are undermined by inflation fears and successive financial crises. The London pm fix
achieves 35 separate successive highs in the year to date.
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2011Gold in catalyt ic conv erters
Gold used in catalytic convertors by a leading European diesel car manufacturer. The first use of gold in
automotive emissions control.
2012Olympic Gold
The custom of awarding gold, silver, and bronze in sequence for the first three places dates back to the
1904 Summer Olympics in St. Louis, Missouri in the United States. At the 2012 games, the International
Olympic Committee stipulates that each gold medal must have a minimum of at least six grams of gold.
The London 2012 gold medals are the biggest and heaviest summer Olympic medals ever made.Read
more...
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Demand and supply
Gold is rare. At the end of 2012, there were 174,100 metric tonnes of stocks in existence above ground. If
every single ounce of this gold were placed next to each other, the resulting cube of pure gold would only
measure 20 metres in any direction.
The demand for this precious and finite natural commodity occurs in many geographies and sectors.
Around 60% of todays gold becomes jewellery, where India and China, with their expanding economic
power, are at the forefront of consumption. In East Asia, India and the Middle East, gold has powerful
cultural meaning, accounting for approximately 70% of the worlds gold jewellery in 2012.
But jewellery creates just one source of demand; investment, central bank reserves and the technologysector are all significant. Each is driven by different dynamics, adding to golds strength and
independence.
In creating supply, gold mining companies operate on every continent of the globe. This broad
geographical dispersal means that issues, political or otherwise, in any single region are unlikely to
impact the supply of gold. Beyond mine production, recycling accounts for around a third of all current
supply. In addition, central banks can also contribute to supply should they sell part of their gold reserves.
It is worth noting that after 20 years as net sellers, central banks are now net buyers, causing not only a
significant decrease in supply but a corresponding, simultaneous increase in demand.
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The golden constant
Since the 14th Century, golds purchasing powerhas maintained a broadly constant level. To put this in
practical terms, an ounce of gold has repeatedly bought a mid-range outfit of clothing. This was true in the
fourteenth century, when an ounce of gold was worth 1.25 to 1.33; it was true in the late 18th century
and it remained true at the beginning of this century (2000 to 2008), when an ounce of gold averaged
269 or $472. Even the exchange rate between gold and commodities has been relatively constant over
the centuries.
On the other hand, the US dollar that bought 14.5 loaves of bread in 1900 buys only 3/4 of a loaf today.
While inflation and other forces have ravaged the value of the worlds currencies, gold has emerged withits capacity for wealth preservation firmly intact. Being no-ones liability, gold exhibits the same wealth
preserving qualities in the face of financial turmoil, earning a reputation as a crisis hedge in addition to its
credentials as an inflation hedge.
The Golden Constant: The English and American Experience 1560-2007 by Roy W Jastram with updated
material by Jill Leyland. Published 2009 by Edward Elgar Publishing Ltd (www.e-elgar.com), hardback,
368 pages, ISBN: 978 1 84720 261 1.
http://www.e-elgar.com/http://www.e-elgar.com/http://www.e-elgar.com/http://www.e-elgar.com/ -
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Price
In todays market, trading in several exchanges of both physical gold and gold derivatives determines the
daily gold price, with the traditional London gold price fix still serving as the daily benchmark price. This fix
is set twice daily at 10am and 3pm. The price of gold is usually measured in US dollars per troy ounce.