Know the money in the science of economics as anything used in the exchange process, which is intended to do transactions and trade exchanges or buy debt. Through the ages old man knew multiple forms of money was in the forefront of what is known in the economic literature of commodity money, including precious commodities such as gold. Gold continued as the leading precious commodities significant particularly in human life to this day because of the social and economic factors. Economically, gold achieves two major and two of the three functions of money, the two first: Agent for the exchange to do transactions and debt purchase. Many of the individuals who sell gold reserve by to conduct economic exchanges. Moreover, uses Alzhpkgueta to the national currency in most countries of the world through retain international Balzhpkahtiattiyat. Secondly, a store of value and this means the ability to move and maintain its purchasing power over time because of the high social stature in different human societies, and also because central banks hold an international currency reserves. In contrast, it was unable to gold to maintain third function is to be a unit of account which is used in the pricing of goods and services in day trades, and the reason is that the available gold is limited in the world and is available in certain countries compared with the expansion and the large trade exchange between countries and within a single country. Therefore, human resorted to minting metal and printing paper money to facilitate and accelerate the process of economic exchange. In spite of that, he remained gold commodity or currency safest haven in the world, especially in cases of high inflation. Where individuals usually resort in cases of high inflation cash to convert their assets into fixed assets in the form of property, land and gold. Valencod get a return Liquid is real interest rate is known in the economic literature بحاصل subtract the inflation rate from the interest rate provided by banks on deposits. In situations of high inflation becomes a high inflation rate exceeds the interest rate provided by the banks, this means that the money you lose part of the liquid value. In contrast, the gold does not get the interest rate! Quite the contrary, the retention of gold as a commodity or currency required to pay the cost of storage and insurance. From here, we can say that retention depends primarily gold, especially at this stage, the expected return on other assets, namely real interest rate.
Performance data for the U.S. economy and published on the website of the Federal Reserve Bank of St. Louis confirms that U.S. interest rates until the middle of the month of October / October of this year and at various financial assets in a steady decline, so it touches the zero percentile on some assets sometimes, especially short-term . The performance data for the European Central Bank for the euro zone emphasizes the fact apparent decrease in the level of interest rates, but it remains at a level higher than the level of U.S. interest rates and margin may reach an average of 1-2%, I believe that these facts confirm that the rise in gold prices is closely linked to policy monetary expansion in both the United States and the euro zone. These policies work to reduce the return on alternative assets, thus becoming the best gold commodity or currency can be acquired by investors to reduce risk, especially in an environment of bankruptcy and continuing collapse in the banking sector. It should be noted according to several news agencies reported that the number of banks that collapsed in the United States amounted to around 99 banks until mid-October / October of this year!
May be the rise in gold prices an indication of investors to central banks and government policies on not convinced by the performance of these policies for the global economy out of the crisis. So gold has become the currency that represents the channel to escape from the investment and to ensure that the wealth of investors with high uncertainty. So we can say that the rise in gold prices came as a reaction of investors reject the idea of venture currently and preferred to stay safe until blurred vision, this new behavior adds the value of knowledge is that investors do not resort to buying gold in cases of high inflation, just as previously mentioned, but resort to buy gold in the cases of the low level of real interest rates due to expansionary monetary policy in sync with the existence of a state of mistrust global macroeconomic performance.
Bet to remain expansionary monetary policy-makers aimed to revive the global economy is betting on the decline in the levels of exchange rates, especially the dollar, to boost exports and reduce the deficit in the trade balances to pay the total demand of new to ensure flight of the economy away from recession. In this regard, highlights two important and interrelated questions. I: Are income levels in the importing countries are able to achieve this goal in light of the large losses in wealth and income levels? In other words, you fall in the exchange rates of the developed countries is able to compensate for the loss in income levels in developing countries? I do not think so! Second: What is the expected rate of inflation in the coming period? I believe that the fastest impact of lower exchange rates, especially the dollar, is the rapid rise in oil prices, the fact that oil is a resident of dollars in global markets.
Moreover, the oil is the lifeblood of economic and fundamental in the process of entrance
Production, not to mention that now prevails winter in the northern hemisphere.
It must be remembered that investors are fleeing from investment idea to buy gold. Thus, if the current situation continues as it is, it is expected that the world is experiencing a wave of inflation caused by the decline in overall width able to cancel the positive impact of lower exchange rates.
In summary, the expansionary monetary policy reduced the level of interest rates and exchange rates, especially the dollar. At the same time investors feel that this time is not suitable for real investment because of lack of visibility and uncertainty. Therefore, investors resorted to buying gold as a safer alternative currency. This shift will cause no increase (or decrease) in the level of overall width. Not to mention the rise in oil prices due to the low exchange rate of the U.S. dollar, which will lead to higher costs for producers and lower overall width. This analysis is expected higher prices and lower production in the next phase. . . I hope that this will not happen.
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