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Supply and Demand Economics Gold is a commodity and like any other commodity, the price is largely driven by supply and demand economics. In simple terms, the less there is available of a commodity in order to meet demand, the higher the price goes. When supply is higher than demand, the price drops. Gold supplies have come into higher and higher demand as the world economy has increased demand for gold. While large portions of the gold market are and have historically been based in jewelry demand, global shifts have changed which countries are leading demand for gold jewelry. The five countries that primary drive gold jewelry demand are China, India, the United States, Italy and Turkey. Gold demands are also spread around the entire world, with 72 percent of demand in Subcontinental Asia and the Middle East as of 2007. These numbers are likely to have shifted as the world economy has changed and shifted since then. Industrial Uses for Gold Besides jewelry demand for gold, it is also used in multiple industrial applications. It is used in electronic and biomedical applications because of its high resistance to corrosion and bacterial growth. Also it is highly bio-compatible, making it very useful for medical components. Finally, gold is used extensively in fuel cells and other technology-driven sectors. Gold as Investment Gold can be invested in as a commodity on the commodities markets. The most popular way to invest in gold in this manner is through gold futures with margins. Margins work by an investor purchasing a small percentage of the value of a gold contract. In essence the investor is making a bet that the price of gold will either go up or down. Another method of investing in gold is to take possession of actual gold coins or bullion. This is not the easiest method of investing because of the cumbersome nature of gold possession. However, it is one way to insure that actual gold ownership is not in question. Investors who want to own actual gold can purchase United States gold coins from a bank or they can purchase coins from gold coin dealers. Summary The price of gold is driven by supply and demand. Currently, demand far outstrips supply and the price of gold is at historically high rates. Gold can be purchased on the commodities markets or it can be purchased directly for outright ownership. Add this page to your favorite Social Bookmarking websites           
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