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When selling gold, it is weighed in a measurement called “pennyweights.” There are 20 pennyweights in one “troy ounce.” A troy ounce is slightly heavier than a regular U.S. ounce and weighs 31.3 grams instead of 28 grams. At the time of this writing, one pennyweight of gold is selling for $67.45.
Historically, ancient Egyptians are known for performing the first smelting of gold in 3,600 B.C. It was a thousand years later that the first gold jewelry started to appear in our history. Even since the beginning of civilization, mankind has been intrigued by gold, making it highly sought after.
In modern society there are many factors that affect gold’s value. Traditionally, the value of the U.S. Dollar is inversely related to the price of gold. The stronger the U.S. dollar, the lower the price of gold, but what affects this?
Worldwide Demand
Jewelry accounted for over 50% of the gold demand in 2010 while other markets such as electronics accounted for less. We are seeing more use of gold in modern day technology than ever before and the demand associated with this sector will most likely continue to rise.
Protection of Wealth
People have a tendency to invest in gold during times of economic uncertainty because of its enduring value. When other investments such as equities, bonds and real estate are not performing well, gold is a “fall-back” many investors rely upon.
Production
Gold mining is prevalent in various countries however the majority of the “easy” gold has appeared to have been mined already. What this means is that gold miners have to dig deeper for less gold, driving the cost up significantly. It’s becoming more difficult for the supply to meet the demand and when this happens, gold prices will rise.*
Conclusion
For whatever reason, humans are infatuated with gold and its desirability remains strong. As long as this continues there will always be a market for it and demand will continue. The ongoing demand, combined with the vast amounts being purchased by bank reserves, and the value of the U.S. dollar, will continue to affect the value of gold in the modern era. What’s fascinating is that gold has been considered desirable for thousands of years and doesn’t appear to be letting up anytime soon.
As more and more technology is developed in which gold components are required, it seems logical to think that demand and value will continue to rise. However items like gold jewelry have been around since ancient Mesopotamia and don’t appear to be disappearing anytime soon either. Gold is synonymous with prestige, wealth, and luxury, and it seems to be human nature to want to show off status levels with gold objects.
Although the price per pennyweight of gold is currently around $67, it will undoubtedly fluctuate with time. It will continue to be consumed by society as a whole, and if history has taught us anything, it appears the demand for gold objects and jewelry will continue for many years to come.
