Wednesday, October 18, 2017

Stronger gold price

 

Has the dollar lost it's value? In the absence of a reliable paper money to take up the baton of world reserve currency, the prospects for gold only look better and better and central central banks are very familiar about it. Central bank bullion sales earlier this year in 2009 were “clearly timed to cap the gold price”. That’s the kind of conspiracy theory chatter that has had gold 'bugs' of all stripes condemned as unhinged for years - and yet now it’s coming from a major investment bank.

Why would central banks fear a strong gold price? It’s simple. The gold price is essentially an indicator of confidence in paper money. The higher it is, the less confident people feel about the worth of their fiat currency. And if people lose faith in paper money, then effectively, they’re losing faith in our entire economic system. When you think about it like that, you start to see why central banks might want to keep a lid on the bullion price.