Gold has been a great commodity for a very long time.

It
has been used in general exchange as a currency, minted
into coins, or simply traded by weighted nuggets
 A barter system is an old method of
exchange. This system has been
used for centuries and long before
money was invented. People
exchanged services and goods for
other services and goods in return.

 There was barter system which was

used as a mode of transaction 6000
years ago

 It was very difficult to transact with

such a helpless system
HISTORY OF GOLD

• Egypt was the first country to use gold as a currency and mode of
transaction and it was 5000 years ago.

• As the gold carry less weight and higher value this gave idea to
Egyptians
• Units were not equal
• Till now only gold and silver have maintained purchasing power
Gold Coins

 Athens was the first country to use gold coins as currency in 630bc
 Value of all coins were same
 Started Building their Empire
 War with Sparta
 Have to Pay Army for the need of foods, arms and ammunitions
 Gold Quantity Started Decreasing
 Athens started mixing Gold with copper and minted the coins
 Now 1 Gold coin = 20 Copper and gold mixed coins
 Gold Coins Started Disappearing
 The Worlds First Hyper Inflation Started

 Ended Up Destroying their own Country

• It was very difficult to use coins for all transactions
• So in 11th Century China Started using paper Currency
• China was the first country to use paper Currency
• Currency notes were issued by an agency of the government of China's
Sung Dynasty in 1023 AD
• In 1107, color printing was introduced to make the counterfeiters' task
harder.
• Europe could not understand how a piece of paper could be valuable, so
they did not adopt paper money until 17th century.
• In January 1988 Australian Reserve Bank of Canberra released the first
batch of plastic notes
 GOLD STANDARD
 In 1879 U.S introduced Gold standard
 The unit of currency is backed or fixed to a certain amount of gold (or
the price of a unit of gold is set).
 The nation will buy and sell gold freely at the predetermined price
(the mint price).
 An increase in the amount of monetary gold can lead to an increase in
the money supply.
 A decrease in the amount of monetary gold can lead to an decrease in
the money supply.
 Before World war I in 1880 Germany’s currency was fully backed by Gold
 As the World war I started Germany decided to backed their currency partially by gold
 Till 1933 U.S currency was fully backed by Gold
 In 1933 Gold Standard got abolish
 The Great Depression
(1929-39) was the deepest
and longest-lasting  By 1930, 4 million
economic downturn in the Americans looking for work
history of the Western could not find it and
industrialized world. numbers rose to 6 million in
1931
 In the United States, the
Great Depression began  The country’s industrial
soon after the stock market production had dropped by
crash of October 1929 half
 Also Known as Black
Thursday
 Germany Devalued their currency and was backed partially by gold (i.e $ 50 value of
currency was backed by $ 20 value of gold)
 U.S asked Germany and other European countries to pay in Gold for supply of consumer
goods and other help
 This happened for six years
 By the End of world war II , US owned 2/3 of world’s Gold
 US National Income: 1933 - $ 46 Billion
1939 - $ 71 Billion
1943 - $ 142 Billion
 The Europe had none gold reserve after world war II
 U.S gave huge loan to Europe in dollar and Europe was flooded by dollar
 The Europe was in Deep Trouble
 The world monetary system was no longer to sustain or it
could have collapsed

Representatives met at Bretton wood’s new Hampshire(U.S)

 Delegates from 44 countries met to create a new
international monetary system
 All the Currency expect some will be backed by dollar
which will be backed by Gold
 Dollar was pegged with gold at $35/ounce (oz)
 Exchange rates were fixed
 Under Bretton wood system there was no reserve ratio
maintained
 Korea was ruled by Japan from 1910 until the closing days of World War II
 August 1945, the Soviet Union declared war on Japan
 Korea was split into two regions, with separate governments.
 The Korean War began when North Korea invaded South Korea
 The United Nations, with the United States as the principal force, came to the aid of
South Korea.
 China came to the aid of North Korea, and the Soviet Union gave some assistance.
VIETNAM WAR 1955
 Also Know as Second Indo China War
 Started as a regional conflict
 Vietnam war was officially fought between North Vietnam and the government
of South Vietnam.
 The North Vietnamese army was supported by the Soviet Union, China and other
communist allies
 South Vietnamese army was supported by the United States, South Korea, Australia,
Thailand and other anti-communist allies
 The war is therefore considered a Cold War
 U.S started deficit spending for Korea,
Vietnam
 Expanded the currency supply
 U.S president realize that they do not
have currency backed by gold
 Other Countries Noticed this and asked
for their gold back
 U.S lost 50% of their gold reserve (1959-
1971)
 U.S got 12 times of dollar backed in their
economy
 On 15 Aug, 1971 world got New
Monetary System
 All the Currency became fiat currency
 The Action was taken to protect dollar
 Currencies may increase or decrease
compare to each other
 But all were decreasing compare to gold
 Beginning in 2010, central banks around the world turned from being net sellers of
gold to net buyers of gold
 In 2015 Central Banks collectively added 483 tonnes—the second largest annual
total since the end of the gold standard
 Russia and China accounting for most of the activity
 The second half of 2015 saw the most robust purchasing on record, according to the
World Gold Council (WGC).
 Not every top bank is a net buyer
 The Bank of Canada has liquidated close to all of its gold, mainly in coin sales
 while Venezuela is in the process of doing the same to pay off its debts
 1. United States
 Tonnes: 8,133.5
 Percent of foreign reserves: 74.9 percent
 With the largest holding in the world, the U.S. lays claim to nearly as much gold as the next
three countries combined
 2. Germany
 Tonnes: 3,381
 Percent of foreign reserves: 68.9 percent
 Germany is in the process of repatriating its
gold from foreign storage locations,
including New York and Paris. Last year, the
country’s Bundesbank transferred 210
tonnes, and it plans to have the full 3,381
tonnes in-country by 2020.

 3. Italy
 Tonnes: 2,451.8
 Percent of foreign reserves: 68 percent
 Italy has likewise maintained the size of its
reserves over the years, and it has support
from European Central Bank (ECB)
 4. France
 Tonnes: 2,435.7
 Percent of foreign reserves: 62.9 percent
 France’s central bank has sold little of its
gold over the past several years, and there
are calls to halt it altogether. Marine Le Pen,
president of the country’s far-right National
Front party, has led the charge not only to
put a freeze on selling the nation’s gold but
also to repatriate the entire amount from
foreign vaults.
 5. China
 Tonnes: 1,797.5
 Percent of foreign reserves: 22 percent
 In the summer of 2015, the People’s Bank of
China began sharing its gold purchasing
activity on a monthly basis for the first time
since 2009
 6. Russia
 Tonnes: 1,460.4
 Percent of foreign reserves: 15 percent
 Russia has steadily been rebuilding its gold
reserves in the last several years. In 2015, it
was the top buyer, adding a record 206
tonnes in its effort to diversify away from the
U.S. dollar

 7. Switzerland
 Tonnes: 1,040
 Percent of foreign reserves: 6.7 percent
 In seventh place is Switzerland, which
actually has the world’s largest reserves of
gold per capita. Much of its gold trading is
done with Hong Kong and China
 8. Japan
 Tonnes: 765.2
 Percent of foreign reserves: 2.4 percent
 Japan, the world’s third largest economy, is also
the eighth largest hoarder of the yellow metal.

 9. Netherlands
 Tonnes: 612.5
 Percent of foreign reserves: 61.2 percent
 The Dutch Central Bank is currently seeking a
suitable place to store its gold while it
renovates its vaults. As many others have
pointed out, this seems odd, given that the
bank fairly recently repatriated a large amount
of its gold from the U.S.
 10. India
 Tonnes: 557.7
 Percent of foreign reserves: 6.3 percent
 It’s no surprise that the Bank of India has one of the largest stores of gold in the world.
The South Asian country, home to 1.25 billion people, is the number one or number two
largest consumer of the precious metal, depending on who you ask, and is one of the
most reliable drivers of global demand. India’s festival and wedding season, which runs
from October to December, has historically been a huge boon to gold’s Love Trade.
 FACTORS AFFECTING GOLD PRICES
 Global Crisis
 Inflation
 Value of the U.S. Dollar
 Central Bank Instability
 Interest Rates
 Quantitative Easing
 Government Reserves
 Jewelry and Industry
 Gold Production
 Supply vs. Demand