Commodities keep bleeding...........
Http://uk.Reuters.Com/article/2015/07/20/markets-precious-idukl3n1002di20150720
Will it have any impact on Real estate in Pakistan ?
Is gold a commodity or money?
the majority of our foreign reserves constitute the US$. Our currency is pegged to the US$ not the gold. Price plunges in gold has nothing to do with the real estate of pakistan. There are other factors that impact the real estate sector of pakistan
Gold rise when economy suffer or during war , during Greece crisis or war Gold prices were high and now they are again at lower side. Its good for rest of world except oil producing countries ...Now Iran will also supply oil to world and oil become more cheap.
It also mean people have more money to invest ,
Arshad, just like stock market where companies' shares and securities are traded, in commodities market everything else including oil, base metals, grains, etc., are traded. Check out details here:
Arshad bhai, one clarification: Please note that our currency is NOT pegged to the US Dollar. Pak Rupee is floating since the early eigties; The rupee was pegged to the British pound until 1982, when the government of General Zia-ul-Haq changed it to managed float.
Apple bro: Most of Iran's production capacity was always in the market. Now every country was complying with US sanctions and Iran was able to find buyers. So we cannot expect huge new capacity to enter the market immediately. Hence oil prices will not plunge.
Allah knows best.
Gold is a commodity and basically considered a safe-heaven of investors when they are up against tough times in economy.
With dollar strengthening and gold plunging means that economic indicators are improving in US and UK. Therefore, oversees investors will have more opportunities to make money in western countries instead of buying real-esate in Pakistan. So I personally think that it will have negative impact on all kind of investments coming to Pakistan.
Rising dollar will put more stress on rupee value. It is also true that Iran production of oil will increase up to 400% which will lower the prices of crude even further. But as usual our corrupt government will not pass all of the benefit to consumers to improve economy.
I have a gut feeling that gold trading could make a come back in the local sarafa bazars. With the govt determined to drive out whatever little documented economy we have back into black market through its tax policies, I see the jewelers polishing their biscuits again.
As for the Iran effect, though I feel happy for Iranian people but it makes me sad as a Pakistani to see that 2 of our neighbors have already established themselves as strong economies (China & India) and a 3rd (Iran) is now on its way to become another mighty power house, while we are really nowhere in this picture of prosperity. Its like watching your childhood colleagues growing up and making it big in life while you fumble from one crisis in life to another. And just btw, has anyone seen our PM for the last 15 days?!
So USD increasing ?? .... How much u think it can increase ....
May be Saayein ji can make some prediction.
Awais bhai…Many people in Pakistan prefer to see their neighbour stronger than their own country 
Awais Sb.
Noora Sharif "The Prince of KSA" reached Lahore Airport yesterday on a short visit again to count his money and go back.
Happy Belated EID Mubarak to everyone. My two cent on this topic as it interest me in learning and sharing knowledge. A little bit of history…
Gold was pegged to the U.S dollar in the early 1900’s. An ounce of Gold to around $20. So everyone deposited their gold to get $$. Uncle SAM printed more money than they actually had Gold and their lie got caught after world II when France or England asked Uncle SAM to take back their $$ and return the gold. So $$ got unpegged to gold until Henry Kiesinger (Uncle SAM state department) convinced the Saudis in the 70’s to sell the oil in $$. Off course the Saudis have major vote in OPEC, World bank and IMF so all the OPEC countries only sold oil in $$. So in essence $$ is pegged to oil. Similarly China and Japan are doing all the trade in $$. For example most of the Japanese car and Chines electronics are exported in $$.
Since the creation of BRIC, there is a chance that $$ will be replaced gradually. Uncle SAM is creating another enormous bubble as the interest rates are zero since 7 years now. The Federal Reserve would like to increase interest rates it but they can’t as the bubble is out of their hand. So all they do is print more money. This is the worst Monterey policy yet. If you think 2008 was bad then wait for this one. It will definitely have adverse real estate effects in the western world but Pakistan is different as real estate does not depend on credits or loans. Pakistan property will have negative effect indirectly if overseas Pakistanis also suffer crisis due to low oil prices and bubble. I can tell you sitting here in the GCC that low oil prices contributed to 30% of job cuts this year.
Yes, gold is at its lowest in 5 years but when Market comes to term with reality then gold will take off again. Gold is real money as it is also prescribed in Quran. It’s about gold vs dollar. I’d rather be wrong until I’m right then right until I’m wrong.
Asad i agree with you gold being a money rather than a commodity as gold cannot be consumed unlike a commodity. It was until 1970s when gold was set aside as a reserve currency where $ replaced it. Currently there is around 160,000 tonnes of gold in the world with the highest share with USA in bullion of around 8000 tonnes. But gold future contracts or paper gold market is around in trillions of dollars. There is an abundance of artificial supply causing the prices of gold to fall. Even on the paper gold contracts are realized in $ than physical gold itself. US$ stands on faith and perception of the world. If it will break it will cause gold prices to rise manifold due to limited supply. But it has no effect on the real estate of Pakistan. Yes oil prices may affect but it will be very little but Pakistan real estate does not work mortgage or debt. Defaults just like during the subprime mortgage crisis may cause problems but that is not the case in Pakistan. Only areas to be affected due to lower investment from overseas if they loose their holding power will be new developing areas but not those which are already developed.
Gold is a commodity that does get consumed. Yes if dollar collapses, the effect will be pretty much on all commodities as investors will be looking for all kind of safe-heavens including but not limited to Gold.
Further FYI:
Space vehicles are fitted with gold-coated polyester film to reflect infrared radiation and to help stabilize core temperatures.
Astronauts’ helmets are covered by the extravehicular visor assembly. The visor is coated with a thin layer of gold to filter out the sun’s harmful rays, according to NASA.
Gold is found in most standard desktop and laptop computers.
A single mobile device contains up to 50 milligrams of gold. That’s a tiny amount but nearly 1 billion cell phones are produced each year. With a gold value of about 50 cents in each phone, that adds up to $500 million dollars in gold each year!
Gold is also used in connectors, switches and relay contacts and allows phones to remain free of corrosion.
Gold is being used for fillings, crowns, bridges and orthodontic appliances.
Gold is also used in medical industry. For example they treat patients with arthritis. Gold salts are used to reduce swelling, bone damage and to relieve joint pain and stiffness.
Imran A Khan thx for the info but you did not seem to get my point. Gold, silver and precious metals have been long used as money universally before paper currency was introduced. If the dollar say collapses than the best bet would be to use these metals as currency probably by backing them up against some other currency because currently the US$ is backed by nothing but is the world reserve currency. If US$ collapses other currencies will also collapse due to huge amounts of debt the US and the rest of the world has. The whole world’s debt is well above $200 trillion. So those who have enough gold can use it as an alternate currency as that is what it has been in the past.
Arshad, your last explanation sums it very well and true. We are going to see a new reserved currency in the coming years. World powers are already discussing this. Chances are gold will be on the top list.
Gold has really gone down by a lot and I am now seriously considering it as a short term investment option as compared to property. What is the best and most secure option to invest in gold in Pakistan? Is it reliable to buy the gold biscuits from goldsmiths or are there fraud risks in that? Thanks.
Arshad Sb.
I got your point, but we are not living in ancient times anymore and it is a fact that no country will go back to gold standards unless there is a collapse. So your hypothesis of calling gold a currency is false to begin with.
Even in the scenario of a currency collapse, Gold is not the only commodity which will replace it as an alternate. All commodities will come in to play from Oil, Platinum, coal all the way to wheat, cotton and barley.
@Kashif sheikh. It seems you are more interested in investing in physical gold rather than online trading. In this case I would suggest you check out “millat gold bars” offered by ARY jewelers. They are offered in various sizes and come with a buy back guarantee. They don’t have an outlet in Islamabad but have a shop on main bank road in Rawalpindi. Some dealers in Jinnah super also sell ARY bars but they charge a premium.