Analysis & Discussion about gold Essay Example | Topics and Well Written Essays - 1500 words

Analysis & Discussion about currency - Essay ExamplePeople value bills and perceive it to a sign of purity and success. It is a metal used for jewelry, as investments and also as monetary exchange. Gold jewelers are considered to be the most successful tune as they deal in something that has only seen appreciation in value most of the time. The value of gold is quoted in financial news and it fluctuates on periodical basis. The gold rates are quoted for price in dollars for gold bullion which is the raw form of the metal. All countries publish gold prices in their respective gold on daily basis. Analysts link the value to the international gold rates quoted in the global markets. The market generally shows an upward trend of the gold prices simply its fluctuations are based on the demand and supply of the metal itself. The sudden surge in the gold price is attributed to the shortage of this metal as compared to its demand. scarcely some analysts argue that gold hoarders have l ed to artificial price hike at times. Although international laws and regulations keep a check on the gold prices and monitor its concern in a prudent manner. Gold was used as reserve currency for many decades. The use of gold coins and issuance of funds equivalent to the gold reserve has been a very common in the past. In the second half of the nineteenth century an international gold archetype was established. The gold standard was created by the free market, the citizenry, and it operates to manage the supply of musical composition currency under self adjusting market system. (Lewis 103) The use of gold as a monetary exchange was abolished and replaced by fiat currencies in the 20th century. Before currencies were convertible into gold but the declining gold reserves and the increasing international trading required currency interchange and thus currencies were made legal tenders by the government and were used for transaction and reserve purposes. The price of a thing at any moment is dogged by the quantity of money which has to be given for it, but the quantity of money is a magnitude, which is in part determined by the nature of the unit of account employed. (Gregory 4) The price of currencies previously was linked with gold and the purchasing power of the currency would be maintained in ground of gold. The same amount of currency, irrespective o f its metallic weight, whether it is a coin or a none, would be convertible to the same amount of gold. thereof the purchasing power in terms of the value of gold would be same and this determined the value of currency as well as the gold prices. But the scarcity of gold mines and deposits around the world has lead government to remove the gold and currency purchasing power equation and has made the paper currency a legal tender for all the transactions. The same amount of currency will have the same purchasing power or not cannot be guaranteed in the fiat - legal tender currency system. The gold has now become a commodity of exchange rather than its previous bring of maintaining currencies purchasing power. In todays government controlled fiat money system, gold has lost its monetary function. However, gold has remained a kind of ultimate government agency of payment, protecting investors against financial crises and inflation. (Belke & Polleit 13) People buy gold jewels, gold bars and gold coins from the investment point of view. The investment options may differ for