| Gold |
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Perhaps no other market in the world has the universal
appeal of the gold market. For centuries, gold has been coveted for its
unique blend of rarity, beauty, and near indestructibility. Nations have
embraced gold as a store of wealth and a medium of international exchange;
individuals have sought to possess gold as insurance against the
day-to-day uncertainties of paper money.
COMEX Division gold futures and options provide an important alternative
to traditional means of investing in gold such as bullion, coins, and
mining stocks.
Gold futures contracts are also valuable trading tools for commercial
producers and users of the metal. Commercial concentrations of gold are
found in widely distributed areas: in association with ores of copper and
lead, in quartz veins, in the gravel of stream beds, and with pyrites
(iron sulfide). Seawater contains astonishing quantities of gold, but its
recovery is not economical.
The greatest early surge in gold refining followed the first voyage of
Columbus. From 1492 to 1600, Central and South America and the Caribbean
islands contributed significant quantities of gold to world commerce.
Colombia, Peru, Ecuador, Panama, and Hispaniola contributed 61% of the
world's newfound gold during the 17th century. In the 18th century, they
supplied 80%.
Following the California gold discovery of 1848, North America became the
world's major gold supplier; from 1850 to 1875, more gold was discovered
than in the previous 350 years. By 1890, the gold fields of Alaska and the
Yukon were the principal sources of supply and, shortly afterwards,
discoveries in the African Transvaal indicated deposits that exceeded even
these. Today, the principal gold producing countries include South Africa,
the United States, Australia, Canada, China, Indonesia, and Russia.
The United States first assigned a formal monetary role for gold in 1792,
when Congress put the nation's currency on a bimetallic standard, backing
it with gold and silver.
During the Great Depression of the 1930s, most nations were forced to
sever their currency from gold in an attempt to stabilize their economies.
Gold formally reentered the world's monetary system in 1944, when the
Bretton Woods agreement fixed all the world's paper currencies in relation
to the U.S. dollar which in turn was tied to gold. The agreement was in
force until 1971, when President Nixon effectively cancelled it by ending
the convertibility of the dollar into gold.
Today, gold prices float freely in accordance with supply and demand,
responding quickly to political and economic events.
Gold is a vital industrial commodity. It is an excellent conductor of
electricity, is extremely resistant to corrosion, and is one of the most
chemically stable of the elements, making it critically important in
electronics and other high-tech applications.
A broad cross-section of companies in the gold industry, from mining
companies to fabricators of finished products, can use the COMEX Division
gold futures and options contracts to hedge their price risk. Furthermore,
gold has traditionally had a role in investment strategies, and gold
futures and options can be found in investors' portfolios. |
© Thanks to: New York Mercantile Exchange, Inc.
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