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The Handbook of Commodity Investing by DIETER G. KAISER, ROLAND FÜSS, FRANK J. FABOZZI

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CHAPTER 31

A Practical Guide to Gold as an Investment Asset

Charlie X. Cai, Ph.D.

Lecturer

Leeds University Business School

The University of Leeds

lain Clacher, Ph.D.

Lecturer

Leeds University Business School

The University of Leeds

Robert Faff, Ph.D.

Professor of Finance

Department of Accounting and Finance

Monash University and Principal Research Fellow

Leeds University Business School

The University of Leeds

David Hillier, Ph.D.

Professor of Finance

Leeds University Business School

The University of Leeds

As a precious metal, gold is synonymous with both wealth and power. For thousands of years, society has placed a great importance on the acquisition and ownership of gold. In ancient civilizations such as the Roman and the Byzantine, gold was used as a (direct) form of currency as well as a symbol of luxury through ornamentation and decoration in jewelry. Today gold is still a measure of wealth and luxury, and as recently as the 1970s it was the base measure of national currency value. Gold also forms the basis for a monetary standard used by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS). In addition to the above, with the advancement of technology, gold is now used frequently in modern industrial activities such as dentistry and electronics.

The objective of this chapter therefore is twofold. First, we provide an overview of gold investments and the operation of gold markets. Second, the chapter provides a survey of the latest developments ...

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