Alasdair Macleod: Gold and interest rates

Section:

By Alasdair Macleod
GoldMoney, St. Helier, Jersey, Channel Islands
Thursday, April 7, 2016

It is commonly assumed that the gold price and interest rates move in opposite directions. In other words, a tendency towards higher interest rates is accompanied by a lower gold price.

Like all assumptions about prices, sometimes it is true and sometimes not.

The market today is all about synthetic gold, gold that is referred to but rarely delivered. The current relationship is therefore one of relative interest rates, because positions in synthetic gold, in the form of futures and forwards, are financed from wholesale money markets. This is why a rumor that interest rates might rise sooner than expected, if it is reflected in forward interbank rates, leads to a fall in the gold price.

To the extent that this happens, the gold price has been captured by the modern banking system, but it was not always so. ...

... For the remainder of the commentary:

https://www.goldmoney.com/research/goldmoney-insights/interest-rates-and...



ADVERTISEMENT

Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

http://www.goldmoney.com/?gmrefcode=gata



Join GATA here:

Mines and Money Asia
Tuesday-Thursday, April 5-7, 2016
Hong Kong Convention and Exhibition Centre
Hong Kong Special Administrative Region, China

http://asia.minesandmoney.com/

Mining Investment Asia
Wednesday-Friday, April 13-15, 2016
Marina Bay Sands, Singapore

http://www.mininginvestmentasia.com/

Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference:

https://jeffersoncompanies.com/landing/2014-av-powell

Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16