Gold is the oldest precious metal known to man. Therefore, it is a timely subject for several reasons. It is the opinion of the more objective market experts that the traditional investment vehicles of stocks and bonds are in the areas of their all-time highs and may be due for a severe correction.

To fully appreciate why 8,000 years of experience say "gold is forever", we should review why the world reveres what England's most famous economist, John Maynard Keynes, cynically called the "barbarous relic."

Why gold is "good as gold" is an intriguing question. However, we think that the more pragmatic ancient Egyptians were perhaps more accurate in observing that gold's value was a function of its pleasing physical characteristics and its scarcity.

• Gold is primarily a monetary asset and partly a commodity.
• More than two thirds of gold's total accumulated holdings account as  'value for investment' with central bank reserves, private players and high-carat Jewellery.
• Less than one third of gold's total accumulated holdings is as a 'commodity' for Jewellery in Western markets and usage in industry.
• The Gold market is highly liquid and gold held by central banks, other major institutions and retail Jewellery keep coming back to the market.
• Due to large stocks of Gold as against its demand, it is argued that the core driver of the real price of gold is stock equilibrium rather than flow equilibrium.
• Economic forces that determine the price of gold are different from, and in many cases opposed to the forces that influence most financial assets.
• South Africa is the world's largest gold producer with 394 tons in 2001, followed by US and Australia.
• India is the world's largest gold consumer with an annual demand of 800 tons.

World Gold Markets

• London as the great clearing house
• New York as the home of futures trading
• Zurich as a physical turntable
• Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming regions
• Tokyo where TOCOM sets the mood of Japan
• Mumbai under India's liberalized gold regime

India in World Gold Industry