Gold prices in USA are showing a rising trend for the last 5-6 months. The fears of recession, uncertainty in the international economies and international stock markets are three basic reasons for this rising trend in the gold prices. Gold prices in USA greatly affect the world economy as gold is mostly traded in US dollar. Any deprecation/appreciation in the value of US dollar changes the gold prices. This change in the gold prices affects the world economy. Here are the top three factors that form a close relation between the gold prices in USA and the world economy.
Production and Export of Gold: The Unites States of America, Switzerland, Hong Kong and United Kingdom are four largest gold exporters in the world. India and China are the two largest importers of the gold. These six countries constitute more than 50% of the world GDP. These countries deal in the export and import of gold metal. When gold prices in country like USA, they also affect the dollar amount of the exports and imports of these countries. In such a case gold prices in other countries also increase and cause increase in inflation rates. This is one important way gold prices in USA affects the world economy.
Gold prices in USA and stock market
Increase in the gold prices can bring benefits for the gold investors. Investors can easily take advantage of the rising gold prices by investing in gold mining companies. This is a very good investing option as compared to buying the gold bullion. The share prices of these gold mining companies usually increase with the increasing gold prices in USA and in international market.
Gold Producing companies
Barrack Gold, Polyus Gold, Newcrest mining, Newmont mining and Goldcorp are the five largest gold mining companies in the world. They are employing thousands of skilled workers from all over the world. So fluctuations in gold prices in USA and other countries directly affect revenue and profit of these companies. When revenue of these companies falls in case of their revenue decease and that creates unemployment in the world economy.
Artisanal miners work independently for gold mining activities. These people are not officially employed by the gold mining companies. According to an estimate, more than 20 million workers are operating in artisanal mining industry. These miners are mostly operating in 50 developing countries of South America and Africa. South Africa has the largest number of artisanal miners.
The large scale mining industry in the African countries like South Africa was badly affected by the climbing gold prices in USA and rest of the world in 2009-2011. Large scale companies had to downsize to reduce their operational costs. This situation greatly benefited the artisanal miners and it improved their revenues in a very positive manner.
Low gold prices in the international market benefits the artisanal miners as their cost of production is very low. Their cost of production is very low as compared to the regular large scale mining companies.