Gold has not only been used as ornaments but also used as currency in many countries. It is not the same as other metals. It is free from oxidation & anyone can preserve it for thousand years. Gold is gorgeous in look & very flexible. There are very few people who do not like gold. Not only women but also many men love to trade in gold.
Gold is used not only as jewelry but also as a future capital. Many people think that just as precious gems work as a way to get rid of the problems of life, so keeping in touch with gold helps doubles to get overcome problems. If you are a gold investor and busy to know how to buy a gold bar, you should also read this article to know more about the valuation of gold.
Valuation of Gold
Many criteria indicate the valuation level of gold. Sometimes it depends on public emotions. Sometimes its value increases for inflation. Besides, the real interest rate also influences valuation. Although the value of gold fluctuates every time. But the thing is, the average value of gold is always the same. It’s not too high neither too low. But there are many ways to value gold.
Gold to Money Supply
In this world, there is one ounce of gold for every person. So, the gold supply increases keeping pace with the population growth. At the same time, there is a fixed currency for every person in the world. For every Indian, there is a rupee. For every American, there is a dollar. But, the rate of per person capita is increasing where the gold supply per person is nearly fixed.
Every year the bank is supplying enough currency according to market demand. As a result, the supply of gold is not the same as the per capita currency. So to keep the value of gold, the value of currency need to be devalued. And the gold supply for the person needs to take to the same level of per capita currency.
The explanation of AISC is All-In Sustaining Costs. All-in sustaining costs of gold are a vital part to keep the gold value high. When the costs of gold mining increased and the rate of per person gold ounce gets low, the mining employees face the loss. They find themselves unprofitable. So, it is necessary to keep the bounce rate high according to the demand. In the last decades, the mining cost has been increasing. As a result, the cost of energy consumption is increasing.
Besides, the cost of equipment, labor & company is increasing. But in this high cost of gold mining, the main factor is the gold price. If anyone buy gold bars, the price should be rational. It should not be too high nor too low. The lower the price will be, the lower the value will be. The production of gold indeed needs to be demandable. But if the miners lose their interest in unprofitableness, the production of gold will reduce.