Will gold continue to rise and the stock market to collapse? What are the expected solutions to address the matter? All these questions occupy the economic community, today we will try together to understand the situation, but in the beginning, here is how it all began.
• The history of gold between the past and the present
The history of gold goes back thousands of years BC, and the ancient Egyptian civilization is considered one of the first to discover it, as well as the Mesopotamian civilization in Iraq, but we still could not reveal the scientific method by which this precious metal was discovered.
The ancient Egyptian was masterful in the use of gold in treatment and adornment, and gold was considered an important metal due to its characteristics, such as:
1. Ease of processing.
2. Difficulty being affected by external factors such as corrosion.
3. Its rarity and heavy weight.
4. Easily machined to shiny and lustrous alloys.
These features were strong attractions that made many to struggle for research and exploration
.
• How is gold detected and extracted?
Gold is extracted from the subsurface of the earth and is revealed in the mines, whereby drilling is carried out for several kilometers in search of yellow metal or solid, sparkling rocks. One of the search methods also is searching for veins in the mountains. In this way, we know that there are minerals present in the rocks of the mountain and by certain measurement methods that can be to differentiate between gold and other minerals in those veins.
Here is a simple video explaining the way, click here.
And after we took a quick look at gold, let us know what is the secret of gold’s link to many countries’ economies?
• The yellow metal that controls the progress and collapse of many countries, so what is its story?
The history of the association of gold with the economy goes back to when gold was used as a metal from which we made coins (before the existence of paper currencies) and this was in the year 550 BC during the reign of the King of Lydia (now Turkey). Since that time and to this day, the link between gold and the economy has not been separated through what is known as the gold base.
• What is the golden rule (golden cap) and what are its advantages, and how did the economic relationship between gold and the dollar begin?
Silver was the main monetary metal in the world until Britain invented in 1821 the gold rule in which the yellow metal gold is used as a standard and base for determining the value of paper currency in any country by linking paper currencies to a fixed and specific value of gold and then the currency is converted and traded so that anyone can Presenting banknotes to the government and asking for their equivalent in gold.
Among the most famous countries that use this rule:
1. France
2. Germany
3. United States
The secret of the dependence of the United States and other countries on this rule is due to the discovery of very large quantities of the yellow metal, which made its trading for sale and purchase open and very large.
This rule did not last long and collapsed during the period of what is known as the Great Depression and was replaced by another system which is the fixing (setting a minimum price for gold) until the United States abolished it and since then the international monetary system has become mainly based on the dollar and paper currencies.
Among the most important features of the golden rule:
1. It reduces the interference of government and banks and causing economic disasters such as inflation.
2. Create stability in international transactions.
Despite all this, gold still plays an important role in the economy and international transactions, and countries are rushing to keep it as a reserve in their treasury that protects it from economic fluctuations, because it is one of the few metals that is characterized by a large degree of stability compared to other metals and currencies.
The most important three factors that affect gold prices:
1. Supply and demand
2. Inflation, interest rates and currencies
3. Geopolitical fluctuations
• The collapse of the stock market and the rise in gold prices.
The war erupted between Russia and Ukraine and, a man does not attain all his heart’s desires for the winds do not blow as the vessels wish, a rise in prices, a collapse in the stock market, a 20% increase in gold prices since the beginning of the new year and a stagnation in the buying and selling market. The price of gold reached about 700 for 18 kerat and 1000 for 24 kerats.
The stock market is always volatile, but gold is still the most stable investment, as the price of gold always recovers because it is linked to its value, regardless of supply and demand.
• Gold and economic crises, when does a safe investment in gold turn to other investments?
Gold is the first resort for investors in times of wars and depressions, but they do without it when stock, bond and real estate prices are fresh and stable.
For individuals, gold is a means of adornment, saving and economy. In Arab countries, we find that the individual’s demand for gold for decorative purposes exceeds his acquisition for economic purposes, unlike the countries of the first world, because it is included in many industries (computers, space vehicles, medicines, and equipment).
• Most and least gold producing countries
Most gold producing countries:
1. China
2. Russia
3. Australia
4. United States
5. Canada
Countries that produce least gold:
1. New Zealand
2. Sweden
3. Finland
4. Namibia
5. Nicaragua