Gold has been
fickle the past few weeks. Just google a
gold chart to see what I mean. From around $1125 mid-December to over $1260
February 27, and the past few days back down to $1215. The rise happened in an environment of
expected increase in interest rates, and that is unusual. Rising dollar based
interest rates usually help make the dollar stronger against gold because gold
returns no interest.
The market seems
a bit different now. The big market is the paper market: certificates, futures,
options, gold funds, etc. The physical
gold market is much smaller, and the gold price tends to reflect the supply and
demand of the paper market. There are statisticians, with PhD’s in their field,
that testify that their studies show that the gold market is manipulated…..it
seems to have been manipulated downwards for years and years now. But the movers
can’t keep pushing the price down forever when the demand for physical gold is outpacing
supply. The paper price has to respond to the economics of the physical market.
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