Commodity Products, Gold Markets, Jewelry Usage, Purity of Gold

Introduction

A very ductile and malleable, brilliant yellow precious metal that is resistant to air and water corrosion.
It is a precious metal that is very soft when pure (24 Kt.). Gold is the most malleable (hammerable) and ductile (able to be made into wire) metal. Gold is alloyed (mixed with other metals, usually silver and copper) to make it less expensive and harder. The purity of gold jewelry is measured in karats. Some countries hallmark gold with a three-digit number that indicates the parts per thousand of gold. In this system, "750" means 750/1000 gold (equal to 18K); "500" means 500/1000 gold (equal to 12K). Alloyed gold comes in many colors.

World Gold Markets

London as the great clearing house
New York as the home of futures trading
Zurich as a physical turntable
Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming regions.
Tokyo where TOCOM sets the mood of Japan
Mumbai under India's liberalized gold regime

24 Hours Round the Clock Market

Hong Kong Gold Market
Zurich Gold Market
London Gold Market
New York Market

India in World Gold Industry

Particulars	India*	World*	% Share
Total Stocks	13000	145000	9
Central Bank Holding	400	28000	1.4
Annual Production	2	2600	0.08
Annual Recycling	100-300	1100-1200	13
Annual Demand	800	3700	22
Annual Imports	600	-	-
Annual Exports	60	-	-

*Figures in column 2 and column 3 are in tons

Indian Gold Market

Gold is valued in India as a savings and investment vehicle and is the second preferred investment after bank deposits.
India is the world's largest consumer of gold in jewellery as investment.
In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewellers and exporters. At present, 13 banks are active in the import of gold.
This reduced the disparity between international and domestic prices of gold from 57 percent during 1986 to 1991 to 8.5 percent in 2001.
The gold hoarding tendency is well ingrained in Indian society.
Domestic consumption is dictated by monsoon, harvest and marriage season. Indian jewellery offtake is sensitive to price increases and even more so to volatility.
In the cities gold is facing competition from the stock market and a wide range of consumer goods.
Facilities for refining, assaying, making them into standard bars in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively.

Major Gold Producing Countries

South Africa
United States
Indonesia
Chile
Zimbabwe

Russia
Brazil
Kyrgyzstan
Canada
Peru

Ghana
Argentina
China
Papua New Guinea
Chile

Mexico
Australia
Uzbekistan
Mali
Colombia

Main Features of Key Asian Gold Markets

Market status
Country	Loco London Gold Trading	Import of Gold Bars
China	Restricted	Restricted
Hong Kong	Free	Free
India	Restricted	Restricted
Indonesia	Free	Free
Japan	Free	Free
North Korea	Restricted	Restricted
South Korea	Restricted	Free
Malaysia	Free	Free
Myanmar	Restricted	Free
Philippines	Restricted	Restricted
Singapore	Free	Free
Taiwan	Restricted	Free
Thailand	Restricted	Free
Vietnam	Restricted	Free

Gold Conversion

Conversion Ratio
Weight	Multiply By
Ounces troy to grams	31.1035
Grams to ounces troy	0.0321507
Ounces avoirdupois to grams	28.3495
Grams to ounces avoirdupois	0.035274
Ounces troy to grains	480
Grains to ounces troy	0.0020833
Ounces troy to ounces avoirdupois	1.09714
Ounces avoirdupois to ounces troy	0.911458
Kilograms to ounces avoirdupois	35.274
Kilograms to ounces troy	32.1507
Ounces troy to tolas	2.6667
Tolas to ounces troy	0.375
Kilograms to tolas	85.755
Ounces troy to taels	0.83
Taels to ounces troy	1.20337
Kilograms to taels	26.7172

For example : 10 ounces troy = 311.035 grams

Market Moving Factors

Above ground supply from sales by central banks, reclaimed scrap and official gold loans
Producer / miner hedging interest
World macro-economic factors - US Dollar, Interest rate
Comparative returns on stock markets
Domestic demand based on monsoon and agricultural output

Purity of Gold Articles is Generally Described in Three Ways

Karats (Parts of gold per 24)	Fineness (Parts of gold per 1000)	Percent (%) (Parts of gold per 100)
24 Karats	999 Fine	100.00 %
22 Karats	917 Fine	91.70 %
18 Karats	750 Fine	75.00 %
14 Karats	583 Fine	58.50 %
10 Karats	416 Fine	41.60 %

Gold Coated Measures

Many gold-coated articles are also used as substitutes for solid karat gold. The thickness of the coatings are often expressed in millionths of an inch, or microinches, and the table below provides a way to translate between these and other measurement units.

1 millionth inch (microinch) = 0.0254 micron
1 thousanth inch (mil) = 25.4 microns
1 millionth meter (micron) = 39.37 microinches
1 millimeter = 39.37 mils

Fine Gold Content

The minimum fineness is 995 parts per 1000 fine gold and gold said to be 1000 fine is marked down to 999.9 fine. The following fine gold contents of other bar weights are accepted by the London Bullion Market Association (LBMA). These bars are available at the spot Loco-London price plus a premium which varies dependent on prevailing market conditions in different locations.

Fine Gold Contents in Ounces Troy
Gross Weight	Bars of 995.0	Bars of 999.0	Bars of 999.9
1 Kilo	31.990	32.119	32.148
1/2 Kilo	15.995	16.059	16.074
100 Grams	3.199	3.212	3.215
50 Grams	1.600	1.607	1.608
10 Grams	0.321	0.322	0.322
5 Grams	0.161	0.161	0.161
10 Tolas	3.731	3.746	3.750
5Taels	5.987	6.011	6.017

Jewellery Consumption

Rank	Countries	1998	1999	2000
1	India	622	617	600
2	United States	379	400	409
3	EU	414	395	374
4	China	228	204	184
5	Saudi Arabia	186	167	169
6	Egypt	135	138	128
7	Turkey	142	92	126
8	Italy	108	101	92
9	Indonesia	48	110	88
10	United Kingdom	65	68	74
11	Taiwan	66	66	60
12	Korea	35	52	56
13	Pakistan	53	60	54
14	France	56	56	54
15	Spain	61	53	51
16	Mexico	32	42	51
17	Thailand	21	42	51
18	Russia	44	40	47
19	Iran	42	41	45
20	Japan	45	43	43

Gold Through the Ages

The history of gold begins in remote antiquity. But without hard archaeological evidence to pinpoint the time and place of man's first happy encounter with the yellow metal, we can only conjecture about those persons, who at various places and at different times first came upon native gold. Experts of fossil study have observed that bits of natural gold were found in Spanish caves used by the Paleolithic Man about 40,000 B.C. Consequently, it is not surprising that historical sources cannot agree on the precise date that gold was first used. One states that gold's recorded discovery occurred circa 6000 B.C. Another mentions that the pharaohs and temple priests used the relic metal for adornment in ancient Egypt circa 3000 B.C. However, it is curious to note that the early Egyptian's medium of exchange was not gold but barley. The first use of gold as money in 700 B.C. is claimed by the citizens of the Kingdom of Lydia (western Turkey). Surely, you remember the kingdom of the famous fortune seeking King Croesus - circa 550 B.C.

Uses of Gold

Gold has been prized by people since the earliest times for making statues and icons and also for jewelry to adorn their bodies. Intricately sculptured art objects and adornment jewelry have been uncovered in the Sumerian royal Tombs in southern Iraq and the tombs of Egyptian kings. Significant buildings and religious temples and statues have been covered with thinly beaten sheets of gold. Due to its rarity, gold has long been considered a symbol of the wealth and power of its possessor.

In 2001, it was estimated that 2870 tons of gold were produced worldwide. About 80 percent of that gold production was used to make jewelry, the majority of which was sold in India, Europe and the United States of America. Gold jewelry is universally popular, loved for its lustrous yellow color and untarnishing character. In many Asian countries, such as India, Thailand, and China, gold is important to religious ceremonies and social occasions, such as the Chinese New Year and Hindu marriages in India.