Rising Demand of Gold

Rising Demand of Gold

Urszula Dolska IBMS 2 a 08045682 (exchange student)
Rush in a gold market In this paper I am going to discuss the problem of rising demand of gold in United Kingdom and United States of America and indicate main factors responsible for the change in demand and the rise of the prices on a gold market. My dissertation will be based on three articles
attached in appendix as well as the chapter 2.5 by John Sloman ‘Economics’. I will also try to prove that it always takes some time to adjust to the changes and people’s behaviour in the market followed by the decisions they take are based on their predictions to the future price. Their speculation can have stabilising or destabilising influence on a price. What is more they are trying to minimize the risk and uncertainty involved in it. I will also give an example of self-fulfilling speculation in a Polish sugar market. *The Time* dimension Short-run and long-time adjustment Speculation Uncertainty and risk One thing is certain – nothing is certain. There is always risk involved in making economic decisions. The people’s behaviour depends on their attitude towards the risk. The bigger the risks of taking certain action, the less likely arethe people to take it. What has happened on a gold market? Speculators could find their deal buying and selling coins, when one ounce of coins cost less that one ounce of gold. ‘Having broken through the $1,000 barrier earlier in the year, the gold price has retreated slightly and is now trading at around $880 an ounce. The 2007 American Eagle one ounce coin, however, was going for $789.95 while the 2006 Buffalo coin cost $800 - offering the potential for an instant return of $80-$90’ (Wray 2008). Self – fulfilling speculation – an example of shift in a price of sugar in Poland {draw:frame} Figure 4 The changes in a price of sugar in Poland in 2004. Source: Polish Main Statistic Office, retrieved from: http://www.nbp.pl/Aktualnosci/Wiadomosci_2004/cukier.pdf...

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