Gold Market. my essay will revolve around the following points ; 1)The sudden rise in the price of Gold and Silver in the past decade 2)The volatility of the gold and silver markets 3)What influences/drives these markets and 4)Why did Gordon Brown sell

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Uday Puri

During the course of this essay  I will be writing about the global Gold market in specific ,my essay will revolve around the following points ; 1)The sudden rise in the price of Gold and Silver in the past decade 2)The volatility of the gold and silver  markets 3)What influences/drives these markets  and 4)Why did Gordon Brown sell of a considerable proportion of UK gold reserves in 2000.

Before I start the main part of this essay I would like to give a short history of gold and silver, and what role they play in the modern market. Since the beginning of civilization Gold and Silver seem to have mesmerized the human mind with the first record of Gold being used for ornaments dating back to 4000 BCE.From the Egyptian to the Greek civilizations silver but Gold especially seem to have been given a very prestigious place in society, even today this role has not changes with Gold and silver playing a very important part in the development of the economic and the industrial sectors. The reason behind these almost “divine” statures given to gold and silver lies in their physical properties and man’s greed. Gold (chemical symbol Au) and Silver (chemical symbol Ag)-due to their chemical properties- are inert, metals meaning they don’t react very easily with other things, this is why if you take a bar of gold and leave it outside in the rain for a few days nothing will happen to it as it won’t react with the air nor with the water. This property combined with the fact that mankind always wants more (gold and silver aren’t very abundant naturally compared to other metals ) and doesn’t want to lose anything (gold and silver stay the same) make gold and silver very precious metals. In modern day society with very important advancements in technology (microchips, medicine etc) and globalization of markets and economies, the roles of gold and silver have not changed they have just expanded, contributing to the rise in their prices. A very important use of gold is its use as a form of money (one of the oldest forms). During the mid 19th century just after the silver currency crisis in England and the United States, the international Gold Standard was created in Germany with the creation of the Reich mark a Gold Standard currency -meaning that all the money in circulation (often paper) had a direct value in gold, thus if a German citizen wanted gold he could have taken his money/currency  (paper) and exchanged to for a fixed amount of Gold- by the beginning of the 20th century most of the western nations had started using the Gold Standard. It was only during the 1960’s when economies had started to grow faster than gold supplies that the Gold standard was abandoned ( first by the US followed by most other powerful economic countries) ,in favour of a system of Fiat currency, meaning the amount of money supply can be increased or decreased without any  respect  to a fixed standard. This marked a turning point in the use and role of Gold.

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Over the last decade the prices of Gold and Silver have risen sharply. For example the price of a troy ounce of gold (31.3g) has risen from an average of 270 dollars (US) in 2000 to an average of 1100dollars (US) in 2010; this mark’s a rise of 870 dollars for the average price of a troy ounce in just ten years. 

 A mix of geological, economical and political factors has caused the price of gold to rise sharply during the last decade. I will start by discussing the economical and political factors and then move on to discussing ...

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