StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Correlations in Gold, Oil and Dollar Value index - Essay Example

Comments (0) Cite this document
Summary
Date: Correlations in Gold, Oil and Dollar Value Index The world has changed to what it was before the 1960s and it is continuously changing. Since the world recognized oil as the next gold and formation of OPEC in 1961, the way the dollar worked and oil responded changed drastically…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91% of users find it useful
Correlations in Gold, Oil and Dollar Value index
Read TextPreview

Extract of sample "Correlations in Gold, Oil and Dollar Value index"

Download file to see previous pages Where oil is the need for global economics, same is the case with gold being the need of every central bank of the world to buy gold in exchange of providing the open market with more currency and to balance trade imbalances in international markets. The US Dollar is no doubt the major player in the world regarding trade and forex exchange, but it is gold and oil that counter the weight on the other side of the global trade seesaw (Zvi Bodie; Alex Kane; Alan J Marcus, 2005). The correlation of gold and dollar is a years old tradition for investments and a leverage to control currency devaluation. Investors around the world generally use gold as a tool to control the economic activities that go around the country and in international market. However, the main roots of gold standard for currency started with the beginning of central banking system. The correlation between gold and dollar can be understood by a simple fact that when there are more cash currency in the market, the people will be able to buy more precious metals. Gold being one of the most precious metals in the world and used as an investment, people always try to convert their cash into gold for better returns in the future. More paper currency at the disposal of the people will mean that the worth of that currency is low and people are able to buy more gold from that therefore causing the currency paid to get that amount of gold to rise. This means that dollar and gold have an inverse relationship. The market works more on the supply and demand system. The gold has been the center of attention as a precious metal since times immemorial and always in demand. Although there has been a lot of mining on the gold throughout the world but the demand never ceases. Just like any business, where people invest to get better returns with the expectation of the business to grow, gold has proven tendency to grow in cost over time. More currency in the market results in lesser gold available for purchase because of rise in competition therefore higher the price of gold (Ambrose Evans-Pritchard, 2010). The price of oil in the international market results in inflation because of rising prices for production and transport therefore negatively effecting the price of the dollar. The price of dollar is affected because the consumers are not able to buy the products that are available in the market therefore demanding more currency in exchange of the products therefore decreasing the value of the currency. As the amount of oil production is reaching all time high and with the rise in industries resulting in increase in the demand of oil, the major oil consuming countries like USA, China and India have started to store oil as reserves. In exchange, these countries give out dollars to the oil producing countries, putting the same inverse impact as gold has on dollar. USA being the largest consumer of oil in the last 30 years, consumes almost 25% of the total oil production that is being drilled in the world to support the mere 5% of the global population. In return to get more oil, not only to use but for keeping it as reserves, the Americans are pumping dollars into the accounts of oil producing companies, therefore tilting the trade balance in their favor. India and China followed by many European countries follow the same lead therefore keeping the demand of oil on a consistent ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Correlations in Gold, Oil and Dollar Value index Essay”, n.d.)
Correlations in Gold, Oil and Dollar Value index Essay. Retrieved from https://studentshare.org/macro-microeconomics/1437203-correlations-in-gold-oil-and-dollar-value-index
(Correlations in Gold, Oil and Dollar Value Index Essay)
Correlations in Gold, Oil and Dollar Value Index Essay. https://studentshare.org/macro-microeconomics/1437203-correlations-in-gold-oil-and-dollar-value-index.
“Correlations in Gold, Oil and Dollar Value Index Essay”, n.d. https://studentshare.org/macro-microeconomics/1437203-correlations-in-gold-oil-and-dollar-value-index.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Correlations in Gold, Oil and Dollar Value index

To What Extent Can HRM Add Value to an Organization

The human resource management supports the companies in devising a comprehensive strategic plan by setting specific goals and focusing on their resources, strengths, weaknesses, opportunities, and threats. It is on the basis of these plans the management recruits, hires, trains and motivates the members of the staff in order to work on the same lines as described by the management. Management is, scholars opine, far more imperative in comparison with marketing, finance, advertising, and sales, because it has a direct connection with the personnel responsible for the good name and fame of an organization. The Human Resources Management function includes a variety of activities, and key among them is deciding what staffing needs you...
8 Pages(2000 words)Term Paper

HR Model That Can Measure if It Adds Value

There has been a change of approach in the way that labor is reviewed in the organization and the modern perception emphasizes viewing labor as an investment and not as a commodity or resources. In this regard, labors have started to be seen as a made of creative and innovative social being who is able to give the organization a competitive edge. (Michael 2006, p. 42)
The term human resource has been changing to broader management and the concept of human capital has been applied more often in place of human resources. Therefore the modern perception of human labor has been changing the way organization have been handling their human capital to a more liberalized way. It has been realized that having a competitive workforce c...
13 Pages(3250 words)Assignment

Irritable Bowel Syndrome and Peppermint Oil

Though IBS is rarely associated with any mortality, patients with irritable bowel syndrome often have a poorer quality of life due to its chronic, relapsing nature, increased morbidity and higher health care utilization than persons without the disorder. Although the cause of the disorder is not fully understood, manometric studies have shown that disordered bowel motility may be responsible for causing some of the symptoms. Diagnostic Criteria for IBS as described by Thompson et al (1999) is as follows:
conventional therapy, comprising of dietary changes like increasing dietary fiber intake, etc, and drugs such as anticholinergics, antispasmodics, and sedatives are often not significantly effective and may not be tolerated b...
14 Pages(3500 words)Case Study

Investigating the Viscosity of Vegetable Oil

Vegetable oils are essentially esters of glycerol and fatty acids derived from plant and animal sources. Due to the difference in the composition of fatty acids in different types of oils, there are differences in their viscosities also. Most vegetable oils are liquid at ambient temperatures; and are also more viscous than aqueous solutions (Lewis: 132).
In several food processing operations, it is essential to determine the viscosity of the fluid being processed so that the most suitable equipment can be selected. The viscosity may change considerably during some operations such as heating, cooling, homogenization, concentration and industrial fermentations by molds. When planning these processes, these viscosity changes nee...
11 Pages(2750 words)Article

Economic Value Added as Tool for Improving Performances

To discover whether pure profits exist, take the revenue of the firm and deduct the costs of all factors of production other than capital. Then deduct the pure return on capital and any risk premium necessary to compensate the owners of capital for risks associated with its use. Anything that remains is pure profits.” Simply in economic terminology economic value added (EVA) is commercial profits reduced by opportunity costs (that is the pure return on riskless investment and the risk premium). Lipsey calls the EVA defined in this fashion as “pure profits, economic profits or, where there is no room for ambiguity, just profits”.

Investors in any company are interested in real profits that are profits r...
7 Pages(1750 words)Report

Cultural Value Orientations: German vs. Turkish

When organizational culture is discussed in the context of national culture, it is based on certain assumptions. According to Schein (2004 qt. Browaeys and Price 2008) culture can be defined as:

"...a set of basic assumptions - shared solutions to universal problems of external adaptation (how to survive) and internal integration (how to stay together) - which have evolved over time and are handed down from one generation to the next".

External adaptation here refers to factors or culture which the management can control while internal integration means the relationship which binds them to the group. In this context management styles and approaches are often influenced by the cultural value orientation - that...
7 Pages(1750 words)Case Study

Oil Prices by OPEC and Market Fundamentals

Market failure is defined as the inefficient allocation of resources by the market, the free market is considered to optimally prices and resources in the production of goods and services, and this is because the price and quantity produced are determined by market forces which include the demand and the supply. The control of prices by a firm or an organization in the market results in market failure, therefore OPEC leads to market failure due to its nature in the market.

OPEC was formed in 1960 by 5 oil-producing countries which include Venezuela, Saudi Arabia, Kuwait, Iran and Iraq, The aim of this organization was to unify petroleum-producing countries in order to realize fair and stable prices of oil .other oil-pro...
6 Pages(1500 words)Report

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

Public Footpaths Value

... that grown out there. In general, the two footpaths were closed because they were not in use and were turned into private farms. Conclusion Public footpaths have important value from economic, tourism and transport point of view. The estimates made by Wales Tourist Board have shown that “the annual economic value of the path network” is $ 548 million (Jenner, 2003, p.54). This revelation also points to the possibility of meeting the maintenance cost of the public footpaths from this revenue alone, if it is properly tapped. Almost eighty percent of the footpath in the area of study (Landyfaelog village) was not maintained and was obstructed by trees, bulb wires and bushy plants. These footpaths were not been in used for years... Walking...
7 Pages(1750 words)Coursework

Americas Dependence on Oil

As stated by the Energy Information Administration, transportation fuels such as gasoline, jet fuel, and diesel account for 2/3 of the total usage of oil in the United States of America (Eccos, 2011). About 45% of the usage is accounted for by gasoline used for light trucks, SUVs and cars (Eccos, 2011).
Of the total amount of petroleum used in the United States, 65% is imported from countries such a Canada, Mexico, Venezuela, Nigeria, Algeria, Iraq and Saudi Arabia (Eccos, 2011). This simply means that even if the United States was to stop using the 45% of the oil used for vehicles there would still be a dependency on oil. In 2006, a total of 317.1 billion gallons were consumed with almost 70% going to transportation, 25% for...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Correlations in Gold, Oil and Dollar Value index for FREE!

Contact Us