Ounce of Gold

Hey readers! As I am writing this on Aug 10’ 2011 at 2:04 am (EDT) I have news that gold is fairing at $1743.50 after conquering the rise of $1717.20 in just two days. It has risen as much as 30% this year and around 400% over the last decade. All this after dollar crashed so much so that American economy fears return of the Recession.  What more can be said when people who dint have a hint if gold was an investment vehicle, were also heard talking about the metal’s amazing show on the price charts. About 18 million ounces of gold has been purchased in just last one month and investors are banking on it high. Well, there is another side to the story. While many are gold lovers, others don’t seem to be quite smitten by the glow. An equity person maintains that gold has no utility and its value is simply opinion driven. And the faster it has risen sooner will it plunge. Discussions will go on as long as speculations are rife, and that is until eternity. But for the time being gold is a sure hit, by hook or by crook!

 

According to Wikipedia, an ounce is a unit of mass approximately equal to 28 grams. It forms a part of United States’ customary systems. The most commonly used ounce today is avoirdupois ounce. An international troy ounce is exactly equal to 31.103 grams and is used to express mass of gold bullion. The types of ounces that exist:

• Fine ounce- a troy ounce of 99.5% pure gold
• Standard ounce- a troy ounce of 22 carat gold 91.66% pure
• Modern ounce of gold- 99.99% pure gold piece

Now the price I mentioned above was the New York spot gold price, fixed by the New York ACCESS Market® in US Dollars. The spot gold is fixed in three currencies worldwide; United States dollars (US$), Pound Sterling (GBP) and Euro (€) through telephone conferencing. So, the value of gold varies significantly from dealer to dealer. It is influenced by many factors; like the purchasing power parity of every currency is in terms of the relative value of dollar and it depends upon the flow of money in market. So an ounce of gold may be costlier in one country and cheaper in another at the same time.

Apart from this relative difference in value of gold, it is always sold for a price above its spot price and that is because manufacturers charge a premium for making a fine piece of gold and it depends upon the type of gold (bar or coin) first and then on the kind of bullion. It is natural since bars have a different way of production and coins are produced in a distinct way. In it also, designer bars and coins are made by minting cast bars. Then is the dealer, who first purchases and then sells gold, after making a profit of his own. And this is how 1 oz Pamp Suisse gold bar is $1,767.00 whereas 1 oz Sparkasse Austria gold bar is $1,498. However, the quantity of gold they contain is exactly same and of 99% purity.
Just have a look at today’s record of gold price per ounce (31.103 g) at 1:52 NY time listed below:

• GBP 1072.91 (up 0.54)
• CHF 1272.23 (down 0.40)
• CAD 1713.01 (down 10.80)
• AUD 1685.41 (down 24.86)
• NZD 2093.04 (down 33.41)
• INR 78801.43 (up 148.21)
• MYR 5239.19 (down 22.25)
• IDR 14895392 (up 74768)
• CNY 11219.16 (up 46.62)
• HKD 13635.27 (up 47.43)
• JPY 134308 (up 276)
• RUB 52133.87 (up 216.62)

From the above data it can be concluded, from the indexes mentioned, Indonesian gold has risen unexpectedly. So, you never know the gold you have bought, what is going to show you the next day. It is advisable to browse a little before shopping for gold.

Also varying inversely with dollar index and accordingly high or low, gold is an important hedge against depression as well as inflation. One ounce coins and bars are most popular among investors. Some of them costing lower premium than others, are on the list of favorite acquisitions. A few majorly sold one ounce gold coins are:

• American Buffalo
• American Eagle
• Australian Kangaroo
• Austrian Philharmonic
• Canadian Maple
• Chinese Panda

Abbreviations used

Oz       ounce
GBP    Pounds per ounce
CHF    Francs per ounce
CAD   Canadian dollars
AUD   Australian dollars
NZD   New Zealand dollars
INR    Indian rupee
MYR  Malaysian ringgits
IDR    Indonesian rupiah
CNY   RMB per ounce
HKD   Hong Kong dollars
JPY     Japanese yen
RUB   Russian rubles

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