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However, the GOD was nonplussed at the very idea of a human exchanging any
material item with another human without set standard. The Almighty then amused
at Himself; and looked at some of the precious items exchanged between Deva and
Devi (subordinated Gods and Goddesses) - the precious stones like diamond, pearl,
stones etc. but they were not so definable. HE finally looked up in the sky at Sun and
Moon and looked at their bright and dull colors - shining Yellow and grayish white.
He found similarity of those colors in earth's mineral - GOLD and SILVER. He
decided to use them as "Common Definable Exchange Medium" as means for
humans to deal with each other.
FOREIGN EXCHANGE
This is how the word "Exchange" appears to have been invented. The humans went
a bit further - they used another adjective "Foreign"' as different from own. This is
how "Foreign Exchange" was born.
Too long name, felt the human. He was used to using abbreviation such as "Bob for
Robert", Bill for William", "Mike for Michael" and "Don for Donald". He thought;
three, four and five letters should be enough to describe the object. So "FOReign
EXchange" was reduced to FOREX. This is how the human advanced his knowledge
to "FOREX Reserve".
Even today, when a person becomes very wealthy, he drinks wine and then seeks a
woman. In the process, he loses his wealth. He earns and then destroys himself.
Nothing has changed so far as human psychology is concerned.
Gold and Silver were therefore most primitive form of investment. Even property
emerged as second choice of investment because of larger outlay of funds at one
time. Gold can be bought in small lots.
Today however, most people hate and love GS. They hate Gold and Silver (GS) and
love Goldman Sachs (GS again). Ask Warren Buffet. It is a battle royal between
physical and paper.
TIMING TO BUY
Before I explain various products under Gold category, I would explain the timing of
buying gold now. According to my research, the United States has frittered away
most of its gold by lending to hedge funds for shorting operation. It will never come
back. They shorted it in $260~$360 range. now the gold is at $950. They are losing
over $600 per Troy Ounce.
The Treasury/FED shows holding of 8134 tons of gold which has remained constant
for over years. However, the loss of gold has been cleverly concealed in the form of
"Earmarked Gold" and tricky language similar to Yudhisthir's famous quote "Naro
va Kunj rova" in Mahabharata.
Although United States has 8134 tons of gold physically, it has lost title to it for
almost 6297 tons of gold. It is like a warehouse keeper who holds your inventory. It
is not his, but yours. But he holds it physically but its true title vest in you. Similar is
the situation for gold.
The world production of gold is about 2500 tons. If the loss of 6297 tons of gold by
United States becomes public knowledge, hell will let lose in the gold market, and
shorts will rush to the market to cover their position. Read my book: "Sub Prime
Resolved" Chapter 14 under the title "Where is Mackenna's Gold". (buy it by clicking
the banner on the right)
It is absolutely eye opener. This reason is alone to push the price of the gold through
the roof in days or months to come.
Further, it is purest form of metal which never gets tarnished or loses shine. If you
throw anything into fire, it will be burnt to ashes, not Gold. It will shine. Go to any
jewelers’ shop for polishing the gold. Some old fashioned jewelers use the ordinary
flame (gas or even candle) to purify or polish the gold to its original finish. (No
chemicals are needed). It is the only inert metal not affected by any acid or base.
There are 4 purest form of life or matter that exists today, some are visible, and
some are not.
1. GOD - Invisible and yet exists, He is felt everywhere
2. SOUL - Invisible and yet exists. It is felt everywhere
3. Truth - Invisible and yet exists, it is also felt everywhere
4. GOLD - Visible, touchable and tangible.
Following are the various forms of products relating to gold which can be either
savings or investment. Many consider long term savings as long term investment.
Gold Units: The most common unit is ounce or Troy Ounce. This is used by
investors or gold traders while buying physical gold. Again, the popular units
depend on cultural practices in the country. In Hong Kong and China, the common
units is TAEL (= 37.5 grams), in India Tola (used to be about 11 grams, now replaced
by 10 grams). The prices are usually quoted in international market as $/Troy
Ounce. All other units are referenced to this price.
Many investors get cheated by the price. There are two Ounce measures as under:
1. Ordinary Ounce (used in normal measurement. 1 lbs (Pound) = 16 ounces. 1
Ounce = 28.3495 grams or 28.35 grams (if quantity is not large)
2. Troy Ounce (= 31.1035 grams. This is the universal standard in which the
gold prices are usually quoted. The gold price is quoted as $ PTO or US Dollar
Per Troy Ounce.
Some banks in India for example, use ordinary ounce to quote the price. So they
charge the investors 31.1035/28.3495 = 109.71% or the customer is overcharged
by 9.71% or nearly 10%.
Troy Ounce:
The traditional unit of weight for gold
1 troy ounce = 31.1034768 grams.
32.15 troy ounces = 1 kilograms (Kilo)
32,150 troy ounces = 1 metric ton (1,000 kilos)
1000 troy ounces = 31.1 kilograms
This article is not complete. Second part will appear on 16th August, when each investment
product will be discussed in greater detail. Resource links will also be provided. Please note
that the entire subject may take a long series which is not the intention of this primer series.
The idea is to show major points as briefly as possible. The practical issues will be given more
importance than the theory of gold or charts etc. This article is meant for ordinary individuals
who want to know why, when, in what form and from where he should buy the gold, and how
to avoid major losses in preventive steps.
Anil Selarka,
Hong Kong, 11th August, 2009
Author’s Web: http://anilselarka.com
Document Statistics:
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Characters (with spaces) 16,373; Paragraphs 81; Lines 300