Gold Reserves Essay

ABSTRACT Gold acts as a catalyst in boosting the economy of any country and maintaining and stabilizing the exchange rate. Gold as being a risky asset, of which governments hold large stocks, it is vital to know the co-integration between countries. The research is done to study whether or not the Gold reserves of the world are co-integrated means that the gold reserves of the world co-move with each other. Data is extracted from the World Gold Council of past 62 years having a sample size of 32 countries. Conceptual framework model is developed comprising of 32 variables.

Johenson Co-integration test is applied to analyze the data. Co-integration is present in the continent of Africa in recent years as the Trace statistic value is greater than the critical value (T>C. V) so there is co-integration between the countries regarding the Gold reserves in the continent of Africa. Countries in Asia show that co-integration is present. It is observed that co-integration is present in Europe from recent years. No co-integration is observed in North American continent found at any level of time because it is noted that the trace statistic values are less than the critical value.

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Co-integration present in South America. TABLE OF CONTENT S. NO. DESCRIPTIONPAGE NO. 1. ACKNOWLEDGEMENTS………………………………………….. ii 2. ABSTRACT………………………………………………………………. iii 3. LIST OF TABLES……………………………………………………… v 4. LIST OF FIGURES……………………………………………………. vi 5. CHAPTER 1: INTRODUCTION…………………………………. 1. 1Overview……………………………………………………………… 1. Problem Statement…………………………………………………. 1. 3Hypotheses…………………………………………………………… 1. 4Outline of the Study………………………………………………. 1. 5 Definitions………………………………………………………… … 1 1 2 2 2 2 6. CHAPTER 2: LITERATURE REVIEW……………………….. 4 7. CHAPTER 3: RESEARCH METHODS……………………….. 3. 1 Method of Data Collection…………………………………….. 3. 2 Sampling Technique………………………………………………. 3. Sample Size…………………………………………………………. 3. 4 Research Model Developed……………………………………. 3. 5 Statistical Technique……………………………………………… 13 13 13 13 13 14 8. CHAPTER 4: RESULTS…………………………………………… 4. 1 Findings and Interpretation of the results………………… 4. 2 Hypotheses Assessment Summary………………………….. 15 15 19 9. CHAPTER 5: CONCLUSION, DISCUSSIONS, IMPLICATIONS AND FUTURE RESEARCH….. 5. 1Conclusion………………………………………………………………. . 2 Discussions…………………………………………………………… 5. 3 Implications…………………………………………………………… 5. 4 Future Research………………………………………………………. 20 20 20 21 21 10. References……………………………………………………………………. 22 11. Appendix……………………………………………………………………… 24 ? LIST OF TABLES S. NO. TABLESPage Number 1. 4. 1 Continent of Africa…………………….. 15 2. 4. 2 Continent of Asia………………………. 16 3. 4. Continent of Europe……………………. 17 4. 4. 4 Continent of North America……………. 18 5. 4. 5 Continent of South America…………….. 19 LIST OF FIGURES S. NO. FIGURESPage Number 1. 3. 4 Research Model………………13 CHAPTER 1: INTRODUCTION 1. 1 Overview Gold has always been a part of interest in human history and a lot of work has been done on it from wars to education. And recently from the starting of paper currency and growing the economies Gold has played a vital role in all this. Every country has some amount of gold reserves which enhances its economy and plays a role as an endorsement during or for any crisis.

All the countries of the world have their own currency exchange indexes which helps them maintain and/or stabilize the rate of exchange and the prices of gold vary respectively. The objective of this research will be to have an in depth analysis of the co-movement of the gold reserves among various different countries of the world. This shows an association between the countries which will give an overview of how each country co-integrates with each other and if not what are the causes behind them. The data of 32 observations was taken on yearly basis to examine the association between the variables.

The researcher studied the hypothesis that is there a relationship among gold future, gold reserves and their co-integration. Gold as being a risky asset, of which governments hold large stocks, it is vital to know the co-integration between countries. This will give a path to see which country is closely integrated with the other country and on what grounds it can have more strong affiliation regarding future investment etc. Through this research it is easy to study the co-integration of the gold reserves between different countries of the world, analyzing from the year 1950 till 2012.

The answers to the question that the countries co-integrate with each other regarding the gold reserves. The sources of information for the chosen topic are past researches and the data retrieved from the World Gold Council website which acts as the secondary data for this research. By applying Johenson co-integrating test on the selected data it can be seen that the gold reserves co-integrate with each other or not. 1. 2 Problem statement To study whether or not gold reserves of the world are co-integrated. 1. 3 Hypotheses Ho: The gold reserves of the world do not co-move with each other.

H1: The gold reserves of the world co-move with each other. 1. 4 Outline of the Study The study focuses on the co-movement of 32 countries regarding the gold reserves of the world. Showing the variations in the movement of countries divided on the basis of continents. The data collected is for the past 62 years based annually. The statistical test used to get to the conclusion is Johenson Co-integration. 1. 5 Definitions Gold A precious yellow metallic element, highly malleable andductile, and not subject to oxid-etion or corrosion. A monetary standard based on this metal; gold standard.