B. Over to you.

v What ways can you suggest to China’s producers in order to improve technology and product quality?

v Do you believe that China’s construction-machinery industry may overtake Western companies? Give your opinions.

v Look through the internet sites concerning international trade. Make a report on Russian products prospective in export market.

 

Text 6 How is gold used as an international investment?

 

Gold is bought and sold around the world in almost every market and currency imaginable: with Egyptian pounds in a Cairo souk, or with dollars on the commodity exchanges of Hong Kong or Chicago. Although some gold trading is based on commercial transactions, such as an Amsterdam jeweler buying gold for inventory, most gold is purchased as an investment.

Gold investors range from powerful central banks who use gold to shore up their currencies to individuals who buy gold hoping that it will hold its value in inflationary times. Gold’s role has changed over the years. Before banks and securities houses became part of the electronically interconnected global economy, gold served as a “liquid” investment that could be exchanged anywhere in the world at any given time. Now gold is perceived mostly as a “hedge” – providing a stable refuge for investors in highly inflationary times when financial instruments such as stocks or bonds tend to lose their value. When inflation is brought under control, however, gold tends to lose its luster because, unlike most other investments, there is no interest paid on gold. The only possible profit is its rise in value, called capital gain.

There are several ways of investing in gold, including buying shares in gold mining companies or gold mutual funds. Most gold instruments, however, are “spot” purchases for immediate delivery to a custodian bank that holds precious metals for the investors. Purchases are made on commodity exchanges such as a Comex in New York, or in most international banks such as Credit Suisse in Zurich where trades are executed electronically for clients around the world.

Instead of buying “spot” gold for immediate delivery, however, investors can also make an agreement to buy gold at a future date. These are called futures contracts. Tailor-made futures contracts, with flexible dates to fit the needs of buyers and sellers, are called forward contracts.

Spot and the futures prices, like a child riding piggyback, tend to move in the same directions, rising and falling with other precious metals in the market. If gold’s spot price increases, its futures price usually rises by the same amount. In general, the prices of precious metals such as gold, silver, and platinum tend to rise and fall together.

 

A. Complete the sentences according to the information in the text.

 

1) Most gold is purchased as… .

2) Powerful central banks use gold to… .

3) There are several ways of investing in gold… .

4) Instead of buying “spot” gold for immediate delivery investors can also make an ….