If you are an investor you know how precarious the markets can be. You might have invested some of your money in gold because of its intrinsic value and status of being a good hedge in times of crises but the price of gold like the price of any other commodity changes all the time. So, you need to track the price movements on a daily basis so you can tell if your investment is earning a good profit or not.
It is no secret that there is a lot of speculation that goes on in pricing gold and there is also some price manipulations behind the scenes but through millennia, the yellow precious metal has retained it’s allure of being a symbol of wealth. But, to get the most out of your investment you need to learn as much as you can about gold. The first thing you will need to know is how gold dealers come up with the price they quote for gold. The most basic term you need to understand is the measuring unit used in the pricing of gold. The measuring term that dealers use in pricing gold is not grams or ordinary ounces but Troy ounces.
Here’s a little background information about gold.
Gold has mined and minted into money since 600BC. Not only was it a status symbol that people wore as jewellery or used to adorn their homes to show off their wealth, it was the one of the most valuable precious metals that preserved wealth.
The first gold coins that were ever created were minted were in Asia Minor. However the ancient Greeks also used gold as currency between the thirteenth and fourteenth century.
During the advent of the industrial economy, gold was traded as money and government mints issued gold certificates. This was the age of the gold standard. However after the Second World War, countries abandoned this gold standard, giving fiat currencies and in particular the US dollar more power. The infamous Bretton Woods System would see gold being replaced with a convertible currency that had a fixed rate.
Around 1971, the United States government began exchanging its dollars into gold because of the excessive debt the government had managed to create by printing excessive print. Because of the US dollar flooding the market, the price of gold rose above its redemption price. Because the U.S dollar was used to back gold in the free market, the dollar became the status of being an important reserve currency in the world. Countries that had already abandoned their gold standard by the 70s began pegging their own currencies against the dollar. Since the recent financial problems and debt crisis in the US , Europe and most other countries, the debate around the sustainability of fat monetary systems has been invigorated and people are once again wondering if we shouldn’t return to the gold standard.
This year, the gold market was the most volatile. Since the Corona Virus outbreak, the price of gold has been on a steady rise. In the past 6 months the price of gold has risen from a low of $1684.00 on the 25th of May 2020 to highs of about $2050 a Troy Ounce in August. Because of a variety of reasons the price has been going down. If you want to take advantage of what has been happening in the gold market, this is the perfect time to sell your gold. Before you start sopping your gold around to local gold dealers, you should understand that the price you see published in financial publications and websites uses a different unit of measurement for the weight. This unit of measurement is called a troy ounce.
The Troy Ounce is an antiquated system of measurement that was used by the ancient Romans. This standard has been retained across time and used to measure the weight of precious metals including gold, silver and platinum. A troy once is equal to 31.1034768 grams. A normal avoirdupois ounce is equal to 28.349523 grams which means that a troy ounce is 10% more than a regular ounce. Remember this when you weigh your gold on a scale that uses the metric weight system of grams. If you have a 100oz gold bar, you need to convert that to a troy ounce.
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