1.1 Introduction
Known as ‘Au’ in chemistry, which derived from Latin word ‘Aurum’, gold is one of the commonly used metals in the world. Gold is one of the most popular metals to be used as an investment. Gold has caught the attention of many investors from all over the world that valued gold as a hedge against economic crisis.
Physically, gold is a glamorous yellow metal that usually worn by woman as jewelry. In terms of chemical, gold can resist corrosion and in fact, can be easily oxidized. Besides of its use as jewelry, it is extensively used in medical especially in dentistry. There are a lot of chemical and industrial applications of gold. Despite that, gold has limited applications which have set gold to be more or less useless.
Despite of its uselessness, gold is known to be expensive. The reasons are quite simple: because gold is rarely found, gold cannot be created and most importantly is it is shiny and does not oxidize. Gold hence is widely used as jewelry and other representative uses. In addition to that, the overgrowing demand for jewelry and the rareness of gold hence determined its price. In return, gold is assumed as the ideal store of wealth for its high price.
The gold price depends on: the general state of the U.S. and world economies, the state of the world financial system, including central bank policies, industrial demand, government spending, currency markets, mine production, jewelry demand, and investment demand.
There are many reasons why investing in gold is such a sound and profitable choice, and one of the main reason is gold is because there is no maintenance on it. Although gold will inflate at certain time, the trend is usually going upwards. Gold is a universal commodity that is va...
... middle of paper ...
...goodness of fit test.
1.5 Scope of Study
The model used in this study is Geometric Brownian motion model. Historical and discrete method is used to estimate the parameters of the GBM model.
The sample of data used is taken from http://www.investing.com/indices/ftse-malaysia-emas-historical-data, which observed from September 2010 to May 2011 with a total of 148 data.
1.6 Significance of Study
By carrying this study, it provides a more realistic representation of the observed data. Individual or relevant bodies such as researchers, mathematicians, invertors, consumers, and companies will benefits from the study. To mathematicians especially, they might further modify and improve modeling of gold share price in the future.
Gold is one of valuable economy indicator. The rising of gold share price is bringing benefits to investors.
middle of paper ... ... Right now, it is almost impossible for people to see how strong the international commodity markets are. Our parents, cousins, and friends, everyone's ears are pinned to what goes on in the market every day of their lives. We need to start teaching more about stock market trading, and with this new expansion of knowledge, we will allow the market to grow stronger and stronger, but at a steady pace.
Alloys in the ornament manufacturing are a general use of gold. Because of it is...
Gold is a particularly volatile commodity that has not been traditionally hedged against price risk, but over the years many firms in the industry have adopted risk management strategies with great enthusiasm. Particularly zealous is the American Barrick Resources Corporation. The company embraced risk management and even incorporated it into one of its main business objectives. Over the years American Barrick has grown into a successful and fast-growing firm, however after discovering abundant ore deposits in a recently purchased mine the company is particularly exposed to price risk. The price of gold and interest rates are at historically low levels and American Barrick is unsure of how to proceed.
The gold standard was a commitment from participating countries to set their currencies in terms of specified amounts of gold. The country’s government allows its currency to be converted into a set amount of gold and vice verse. The main benefit of a gold standard is to help keep inflation low since it is caused by changes in the supply and demand of money and goods. The government cannot print too much money because the supply of money would increase, but the value of gold would remain the same and eventually would result in the treasury running out of gold. This is tricky because the government could not increase the amount of money in circulation without also increasing the country’s gold reserves. The extensive use of the gold standard implies a system of fixed exchange rates where gold is really the only
...s the example of the price of the gold to determine the relationships between the Linear Algebra and the Financial World. The uses of the financial concepts and the mathematics equations generally support the author’s aim of the price changing in different period of time. As the mathematics research article, it has clearly uses the symbols and equations to support the point of view of the author which shows the result of the element of the completed market and the changes of the price. However, it is not easy for a people who lack of mathematics knowledge to understand the concepts and equations of the mathematics. It will be easier for them to read and understand the author’s explanation if there are more explain on the equations or more wording explanations. Overall, Barbara Swart had been clearly explained the relationship of Linear Algebra and Financial World.
Gold contains several properties that are visible through the human eye. It is these properties that will greatly differentiate gold from other existing elements in the earth. These physical properties make gold unique. The element gold is yellow in color. It is actually a very bright yellow color. When it comes to its luster, gold is
2 (1970): 383–417. i.e. a. Fama, Eugene F. “Efficient Capital Markets II.” Journal of Finance 46, no. 1 (September, 2011). 5 (1991): 1575–1617.
The length of the estimation period is also significant in the estimation of beta. Blume (1971) depicts empirically that the stability of individual beta increases as the time of the estimation period increases. Similar results were obtained by Altman (1974) and Baesel (1974) who with the use of monthly data, estimated beta for estimation periods of one year, four years, six years and even ni...
Stock market prediction is the method of predicting the price of a company’s stock. It is believed that stock price is lead by random walk hypothesis. Random walk hypothesis states that stock market price matures randomly and hence can’t be predicted. Pesaran (2003) states that it is often argued that if stock markets are efficient then it should not be possible to predict stock returns. In fact, it is easily seen that stock market returns will be non-predictable only if market efficiency is combined with risk neutrality. On the other hand it is also been concluded that using variance ratio tests long horizon stock market returns can be predicted....
The use of a gold pan is one of the oldest and most simple forms of gold mining.( Colledge) The biggest thing to remember about the gold pan is that even though it may be relatively effective in catching gold, its main drawback is that it can only process so much material at one time. This is why the gold pan is not used as a commercial mining tool in the name of processing large amounts of material for pay. A gold pan may be used to get places that can only be reached on foot. But the material must have to be rich enough to make the time worth it if there is only a limited amount of material to be processed. The main use for a gold pan other than recreational purposes is to locate a area with gold bearing ground so that later on commercial mining equipment may be brought in to retrieve gold from a large area of ground
Adam Smith wrote in his masterpiece, the wealth of nations, “It is the necessary, though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another” (Smith, 2005). This propensity in human nature led to the development of currency – a medium of exchange accepted by a community of people. For centuries, gold and silver were used around the world as currency; in 1834 the United States, formerly on a bimetallic standard, converted to a gold de facto standard. This policy made it so the dollar was backed by gold at a ratio of $20.67 per ounce. The Gold standard was used until August 15, 1971 when President Richard Nixon announced that the United States would no longer redeem currency for gold.
In turn everything in the present and the future is judged through the stocks as they hold a high importance in industrialized economies showing the healthiness of said countries economy. As investing discourages consumer spending over all decreases, it lead...
Gold is one of the most popular metals as investment. Because of its high and consistent value, it is considered one of the safest commodities to invest in. There are several ways of using gold as an investment. Gold can be physically bough in the form of bullion bars or bullion coins. Gold exchange products can be traded in major stock exchanges in the same manner as shares. These include closed-end products or CEFs, exchange-traded notes or ETNs, and exchange-traded funds or ETFs. Gold accounts can be availed from banks and their management greatly depends on whether it is an unallocated or an allocated gold account. Gold certificates used to circulate as money until the United States restricted private gold ownership in 1933. Buying shares in gold mining companies comes with structural, management, and political risks but investing in the right company at the right time can increase share prices to as much as 20%.
Following the trend of economy, it is important to investors to understand that strong economy creates strong stock market. To elaborate further, as stock prices are increased by current and future expectations of earnings, thus without a strong economy it would be difficult for the companies to increase and sustain their earnings (Kong 2013). The economy development is usually calculated using the gross domestic product of a countries. On the other hand, a change is the stock price can also cause a major impact to the consumers and investors directly. Hence, a loss in confidence by investors can cause a downturn in consumer spending in the long term, which will also affect the economy’s output (Aysen 2011). The graph below shows the relationship of stock market price (KLCI) and the GDP of Malaysia in 2009. Thus, it can be concluded that the economy and the stock market has a positive relationship.