Gold is a symbol of power, it has always been synonymous with wealth.
"Kings and nobles were crowned with a golden crown. Gold has always been associated with something positive," says Olaf Stoc, a professor at the Frankfurt School of Finance and Management.
Gold has managed to maintain its status as a popular luxury good to this day: around half of all gold mined today is processed into jewelry. If it is a rare piece of jewelry, it can reach a very high collector's value. And if it is a rare luxury watch, the value of the item can increase enormously.
But as a rule, gold jewelry is not the best option when it comes to potential investments. In most cases, jewelry is not something that is "pure" gold. It is mostly alloys - a mixture of various metals. The percentage of gold in earrings, necklaces or bracelets can thus drop to a level of 58,5 percent.
Record: $3.123,21 per zlata
Instead of jewelry, a much better option for investing money is gold coins or gold bars. Gold coins are made of fine gold, meaning the gold content is 99,9 percent. The value is expressed in fine ounces. Currently, one ounce of gold (or 31,1 grams) costs just over 3.000 US dollars.
On Monday, it hit an all-time high of $3.123,21 an ounce. Thirty years ago, in March 30, the price of gold was around $1995 an ounce.
The fact that the price of gold has risen so much over the past three decades has something to do with inflation. Although the price of gold has risen faster than inflation, "there have generally only been two to three significant increases in the price of gold," explains Professor Štoc.
He emphasizes that the price of gold can fluctuate in the short term and notes that, as a scientist, he finds the thesis that gold is indeed a good hedge against inflation a bit strange.
Defining the price
The price of gold has not been determined for the last 30 years, it has been defined since the 17th century, when it was done on the Bullion Market in London (the most important over-the-counter place for trading gold and silver, ed.). Since the 20th century, there has been a clearly defined market structure for gold, which was created on September 12, 1919 with the help of the so-called "London Gold Fixing". This means that since then, the most important gold traders have defined their prices twice a day - on weekdays at 10:30 and at 15:00. This rule is valid to this day.
"Of course, that has a certain symbolic power," explains Štoc, and also emphasizes: "Of course, it is also traded electronically, and there the price of gold is determined second by second, minute by minute."
Why is gold so valuable? And why does one ounce cost more than 3.000 euros today? The reason is, among other things, the characteristics of gold. Gold is an excellent conductor of electricity, it is easy to process, and it is almost indestructible, even for a long period of time.
All of this makes gold an important raw material for electronics. A smartphone contains about 30 milligrams of gold. The metal is also used for dental fillings, or the production of artificial teeth – because the acid in the oral cavity and in food can do nothing to gold.
Why do central banks buy gold?
People are exploiting more and more gold. In 2024 alone, according to the United States Geological Survey (US), about 3.300 tons of gold were mined worldwide. Besides China, the countries that exploit the most gold include Australia, Russia, the US, and Canada.
According to the World Gold Council, humanity has mined more than 220.000 tons of gold since the first gold rush in history. Most of this precious metal is now held by central banks, totaling about 37.000 tons. They are also feeling the "gold rush" today: in the first half of 2024 alone, central banks around the world bought 483 tons of gold, a record amount.
According to the World Gold Council, the United States had the largest gold reserves at the end of 2024: 8.133,5 tons. Germany is second on the list with 3.351,5 tons, followed by Italy, France, Russia and China. It should be noted that the World Gold Council only records data that countries make available voluntarily. The actual reserves could therefore be (significantly) higher.
The World Gold Council explains that many countries hold gold reserves because they want to reduce their dependence on the dollar. In the event of a global crisis, national currency turbulence and inflation are possible. If a currency is shaken in times of crisis, gold reserves serve as "insurance", that is, a means of stabilizing the exchange rate - for example, by targeted purchase or sale of a foreign currency.
Gold and on the stock market
In the modern version of the gold rush, private individuals, or citizens who do not want to deposit gold bars in a safe deposit box like central banks, can also participate. They can invest in investment funds that deal with gold, in certificates or other types of securities (ETFs, ETCs), and even in gold mines themselves. But, unlike funds, the risk of investing in an individual share is significantly higher - because a mining company can go bankrupt. Or stop mining.
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