Empirical Research On The Impact Of The Price Of Gold, The Money Flow

Now, the financial crisis has affected not only the world's financial markets, but also the global real economy. The most serious problem is the lack of monetary liquidity in all the markets, which is caused by this financial crisis. With the sudden decrease of the global monetary liquidity, the prices of varies financial assets dropped. The stock index dropped, the real estate price bubble burst, and the commodity prices declined sharply. All of these made people lose confidences of the global economy.In order to avoid risks, to keep and increase their assets, people began to invest to the gold market, which stimulated the total demand for gold, and the gold price rose up. However, when the gold investors were all optimistic to the gold market, the gold price started to decline. So many investors wanted to find out the reasons of the fluctuation of the gold price.With the global financial crisis deepened and spread further and nearly all the investors focused on the gold market, more and more people paid attention to the relationship between gold prices and the monetary liquidity.The thesis mainly focuses on "the impact of monetary liquidity on the price of gold". Based on the explanation of the important influence factors to the gold price, we use co-integration approach, Granger causality test and VAR model to examine the relationship between gold prices and the monetary liquidity. And in accordance with the conclusions, we give some useful suggestions to gold investors that how to invest in the gold market better in the current financial crisis period.The thesis consists of five chapters.Chapter one: To introduce the study background, the significance of the thesis, the study method and approach, as well as the innovation and inadequacies of this thesis.Chapter Two: The literature summarization chapter. To summarize the explanations of the definition of monetary liquidity, the liquidity measure theories and methods, and the studies about the impact of monetary liquidity on the asset price. And also point out the inadequacies of these researches. Chapter Three: To analyze the present situation and the history trend for the gold price, as well as its long-term, medium and short-term influencing factors. And then, to explain the system of the monetary liquidity impact on the gold price.Chapter Four: The empirical study of the impact of the monetary liquidity on the gold price. This chapter using co-integration approach, Granger causality test and VAR model, to study the relationships among the gold price and its important influencing factors. The test results show that the monetary liquidity is short-term influencing factors of gold price, and there is a positive correlation between the two.Chapter Five: Conclusion and suggestion part. According to the empirical study in chapter four, in the short term, the changes of monetary liquidity determines the trend of gold price. In the current financial crisis, the global monetary liquidity still lacks, so the gold price may still drop. So investors should be rational, use gold as a hedge of financial management tool and take the monetary liquidity into consideration when they invest the gold market.