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Precious Metals Industry
David Cramer, Nicole Fleischman, Carson Foust & Henry Frobose
Background of Precious Metals
First used by Egyptians, Sumerians, Greeks, Athenians and Romans
1492- Columbus came to America and found gold
1838- Remove Cherokee Indians to Oklahoma
1849- California Gold Rush Forty-niners Panning
Gold became a medium of exchange
Background of Precious Metals
1920s- U.S. was economically booming
1929- Great Depression1933- President Franklin Roosevelt
wrote an executive order taking all but $100 of U.S. citizen’s goldIncreased the value of gold by 75
percent
Gold’s Average Price
Year Approximate Price Per Troy Ounce1800s- 1920s $18.951920s $20.001930s $34.001940s $33.501950s $34.501960s $35.00*1970s $36.00-$306.00*1980s $350.001990s $350.002000s $300.00-$800.00*
*Denotes rapid price fluctuation throughout those years.
Uses of Gold
Currency, investmentCoins, gold bullion
Jewelry, AwardsDental work, medical uses
Crowns, bridgesElectronics
Cell phones, computers, TVs
Uses of Silver
Currency Jewelry and awardsSilverwareMedicineElectronics
High conductivity, lower price than gold
Copper
Third most-used industrial metalUsed for wiring and plumbing
Wires, pipes, roofingGood conductor, resistant to
corrosion
Iron and Steel
Iron and Steel make up 95% of all metal produced annually by weight
Least expensive industrial metalStrongest industrial metalAutomobiles, tools, machines,
bridges, fastenersCan be made corrosion-resistant by
adding chromium, nickel, tungsten
Aluminum
The earth’s second most abundant metal
Resistant to corrosion, light weight
Used in airplanes, automobiles, bicycles, pop cans, foil
Highly recycled because of its valuable properties
Other metals
PlatinumOften added to gold or silver in
jewelryUsed in catalytic converters in carsCathodic protection systems
UraniumUsed for nuclear power reactors,
nuclear weapons, armor, ammunition
What are some companies within the
precious metal industry?
Kay Jewelers
Founded in 1916 by Sol and Edmund Kaufmann
Reading, Pennsylvania Three big metals:
Platinum, Gold and Silver “Every kiss begins with Kay” “Although product offerings have
changed through the years, shopping at Kay has remained a valued tradition.”
U.S. Steel
Founded in 1901 by Andrew Carnegie, J.P. Morgan, Charles Schwab and Elbert H. Gary
Pittsburgh, Pennsylvania Big Metal:
Steel “In response to economic changes in the steel
industry, the corporation reduced its domestic raw steel production capability through a number of restructurings. In addition, the corporation entered into several steel joint ventures with both domestic and foreign partners.”
U.S. Steel
2001- tax-free spin off of the steel and steel related businesses into a freestanding, publicly traded company known as United States Steel Company
Metals USA
Founded in 1996 Houston, TexasBig Metals:
Aluminum, Steel and specialty metals
Three Groups:Plates and Shapes GroupFlat-Rolled GroupBuilding Project Group
Gold Bubble Burst
False security of investment with gold
Factors:State of the U.S economy and the U.S.
dollar value Amount of Investors
Gold Bubble Burst Con’t
When if ever should you invest in gold?
Industrial Metal Burst Cont’d
Year Approximate Price Per Troy Ounce1800s- 1920s $18.951920s $20.001930s $34.001940s $33.501950s $34.501960s $35.00*1970s $36.00-$306.00*1980s $350.001990s $350.002000s $300.00-$800.00*
*Denotes rapid price fluctuation throughout those years.
Industrial Metal Burst
FactorsThe Chinese Economy
The relationship between supply and demand
The Value of Precious Metals in 2010
Type of Precious Metal Approximate Price Per Troy Ounce
Platinum $1503.00
Gold $1079.00
Palladium $416.00
Silver $15.27
Nickel $.36*
Copper $.11*
*Denotes the value of precious metals in 2009.
Investments and the Precious Metal Bubble
Low Interest Rates for Savings Accounts
Many Americans see safety in Precious Metal Investments because of its recent steady increase rather than investment in other Companies in the Stock Market
Many Americans do not have enough diversity in their investments
Inflation and Precious Metal Market
Historically the value of gold reaches it higher values when the value of a dollar is low and Inflation is high
The value of a dollar continues to fall
What about high inflation?
Currently Inflation is not a problem, however after the recession in 2009 the scare is Inflation will start to rise.
One way to prevent this precious metal bubble will be to control inflation
Other Effects of a Bursting Bubble
Jewelry Market Housing Market
Build Materials Electrical WiringMany other markets effected if
people lose there savings
Look back to the Past . . .
In 1980 there was a sharp correction or “burst” in the Gold market. The price of Gold had been rising for years when the price was cut in half.
The weakening of the US dollar as well as inflation contributed to this downfall.
Prediction for the Future . . .
Many precious metal values continue to rise
The value of the US dollar is decreasing
Inflation? With inflation adjustment the value
of an ounce of Gold would need to be over $2000 in order to compare to !980
Final Thought
If inflation is not kept under control in the next few years the value of precious metals will continue to increase and then it is inevitable that the precious metal “Bubble” will Burst!
Fun Facts ~ Gold
What occupation has used gold since 700 B.C.?
What government agency uses a large quantity of gold because of it’s conductive capabilities?
Raise your hand if you have something gold on you right now.
Questions??
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