Many people wonder if gold currency will become the standard. Well, probably not anytime in the near future. Yet banks around the world have begun holding gold as a perfect reserve option and it’s raised a few questions amongst many people.
It is, however, expected that people are going to start reverting to gold as solid reserve to invest in. n fact, many keep their savings in the form of gold reserve. Also, many countries are taking small steps towards keeping gold in their reserves, to back up their current currency.
America first began to move away from the gold standard during the World War I. Then when President Nixon held office, he shut down the option for Americans to trade in their dollars for gold currency. It has never been the same since.
The United States is still, however, one of the largest holders in gold, with over 8,000 tons. In some ways the U.S. dollar is back by gold — but just not in the normal standard.
Gold is used by jewelry manufacturers in America, consuming over 3000 metric tons. And with a little more than 2,000 being mined. A majority of the difference used to be made up by banks, however most banks are only net buyers in our current times.
Yet, in Europe, the sale of gold has gone down, compared to recent times. China is not a large producer of gold, but has become a large consumer in that area. It is also highly encouraged for people in China to not only use gold for jewelry, but investment purposes as well.
There have been many instances where gold stocks have out done bullion, and vice versa, however, it has been said that stocks will outperform the physical aspect because of the differing tax treatments to both avenues. Debt will need to go down, and interest rates to go up before any noticeable difference takes place in the wold of gold.
Plus, seasonal demand has an effect on the gold. For example, when dealers begin making more purchases in gold during the months of August and September. When it comes to the price of gold, remember that summer is usually the lowest peak.
Fact check: CNBC.