I hope you have read the previous two articles and have some sort of understanding as to how GOLD matters in a Nation’s Economy. Now comes the interesting part follow Global News and apply common sense !! This article will sum up everything 🙂
Some of the news which you should be aware of with regards to GOLD :
1: Germany’s Central bank ( BUNDESBANK ) has requested its GOLD RESERVES be brought back to its country. GOLD RESERVES of about 1500 tonnes will be brought back to Germany from US in 5 years at around 300 tonnes per year.
2: Cyprus wants to sell its GOLD RESERVES of about 400 million EUROS 10.36 tonnes of GOLD RESERVES ) to finance part of its bailout due to recent economic slump.
3: Texas wants its GOLD RESERVES back worth 1 billion US dollars( according to current price about 19.72 tonnes ).
4: Russia and Mexico have increased their GOLD RESERVES by 16.5 tonnes and 16.8 tonnes respectively as of April 20 2013.
A simple analogy to understand GOLD RESERVES : I am a billionaire and have STATE OF THE ART PARKING FACILITY in my estate with all the latest BURGLAR ALARMS , MOTION SENSORS , AUTO LOCKING of my PARKING FACILITY in case of any ANOMALY DETECTION, 24 hours surveillance blah blah.. You are a budding millionaire and you have a passion for luxury cars but have a fear that someone might try to steal it from you. When you go on a vacation you will obviously come to me for parking your luxury car whatever. In return i guarantee you complete safety , blah blah of your car but for a small fees for parking your vehicle in my facility. Now when you go on vacations , i can use your car as tourism vehicle, give it for rent for some businessman ( my contacts of-course ) etc and make myself even richer but you wont be knowing. When you return i will of-course return your car just like the way it was before without even a scratch. As a person your are happy and i am happy for obvious reasons 😛 Important question is suppose you return from your vacation earlier than intended and i have given your Car for someone else what do i do !!!!
This earlier analogy will help you better in understanding the following arguments 🙂
1: US as it is in huge debts of $16,781,967,702,405.37 as of today ( you can look up US National Debt Clock online ) and on top of that US itself doesn’t have so much of GOLD RESERVES to give back to Germany all of a sudden because GOLD RESERVES have been used in international trades. US will now either have to give its own GOLD RESERVES ( from 8133.50 tonnes ) which cannot simply happen because as discussed in earlier articles your currency value gets depreciated drastically. Just like the luxury car analogy, Why not i purchase another car which is exactly the same but at a lesser price and deliver it to you. The same thing is happening with GOLD prices decreasing day by day.
2: Cyprus wants to sell its GOLD RESERVES to come out of economic crisis. Important question is which country will capitalize on buying from it. ( More impotently isn’t it worth purchasing GOLD now than earlier ? This GOLD market manipulation has been happening from almost 2 years )
3: Texas wants 19.72 tonnes of GOLD RESERVES back. US Government : What do i do ? 😛 Decrease GOLD prices purchase GOLD and give everyone’s share back ( sounds better ? ).
4: For the on going currency wars RUSSIA is increasing its GOLD RESERVES. Where as US is driving other countries NUTS by influencing them that GOLD should not be considered as means to print currency notes ( Reserving GOLD was just a tradition so why not we end this tradition and go for PLATINUM coins !!)
Though this is not everything. There are lot of other factors too which is influencing the on-going currency wars . I wanted to keep it simple. I hope it helped you in some way to analyze how value of a commodity changes (in this case GOLD) .