General Studies III

World Gold Council

About World Gold Council

  1. The World Gold Council is an association whose members comprise the world’s leading gold mining companies.
  2. Headquartered in London United Kingdom, it has offices in India, China, Singapore, Japan and the United States.
  3. It helps to support its members to mine in a responsible way and developed the Conflict Free Gold Standard.
  4. It is the market development organisation for the gold industry.
  5. It works across all parts of the industry, from gold mining to investment, and their aim is to stimulate and sustain demand for gold.
  6. WGC frequently publish research that demonstrates gold’s strength as a preserver of wealth – both for investors and countries.
  7. WGC also provide analysis of the industry, offering insights into the drivers of gold demand. They have also launched various products such as SPDR GLD and gold accumulation plans in India and China.

Gold & Economy

  • As Currency: Gold was used as the world reserve currency up through most of the 20th century. The United States used the gold standard until 1971.
    • The paper money had to be backed up by equal amount of gold in their reserves.
    • Although the gold standard has been discontinued, some economists feel that we should return to it due to the volatility of the U.S. dollar and other currencies.
  • As a hedge against inflation: The demand for gold increases during inflationary times due to its inherent value and limited supply. As it cannot be diluted, gold is able to retain value much better than other forms of currency.
  • Strength of Currency: When a country imports more than it exports, the value of its currency will decline. On the other hand, the value of its currency will increase when a country is a net exporter. Thus, a country that exports gold or has access to gold reserves will see an increase in the strength of its currency when gold prices increase, since this increases the value of the country’s total exports.
    • Since, the central banks rely on printing more money to buy gold, they create an excess supply of the currency. This increases the supply and thereby reduces the value of the currency used to purchase it.

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