Government vaults and central banks are an important source of demand for metal. The demand for investments, especially from large ETFs, is another factor underlying the price of gold. Gold sometimes moves in the opposite direction to the U.S. dollar because the metal is denominated in dollars, making it a hedge against inflation.
Investing in a Best Gold IRA Account is a great way to diversify your portfolio and protect your wealth against inflation. As I have said in many interviews and articles, the Federal Reserve and Central Banks CANNOT boost the price of gold wherever they see fit. The algorithms electronically calculate the market price of gold based on its cost of production. The only way the Federal Reserve and Central Banks can control the price of gold is to rise. This is by using an enormous amount of paper contracts to prevent the price of gold from rising too high.
Monetary policy controlled by the Federal Reserve is perhaps one of those that most influence the prices of gold in real time in the market. Interest rates have a significant influence on gold prices due to a factor known as opportunity cost. Opportunity cost occurs when profits that are guaranteed in an investment are forfeited because of the possibility of obtaining even more significant benefits from another investment. Angelo from SRSroccoReport, there's a different factor at play and it's not what people expect.
While he agrees that the Federal Reserve and central banks do intervene in the gold and silver markets, their influence is limited to upward movements. Steve finds that the main cause of price changes is oil. At first glance, this theory makes sense, especially considering that governments set the price of gold for decades or suppressed it within the framework of the London Gold Pool, while some financial institutions have already been fined for influencing or manipulating gold prices. A popular belief in the gold investment community is that gold prices are manipulated, generally downwards, in what is described as price suppression.
Gold market manipulation, also called gold price manipulation, can be broadly defined as a deliberate effort to control gold prices. The popular story goes that the Federal Reserve uses bullion banks as agents to bring down the price of gold to Comex in order to lower the price of gold. While I agree that central banks play a role in intervening in the gold market, there is no doubt that they CANNOT push the price of gold wherever they want. Therefore, any attempt to systematically suppress gold prices would be counterproductive, since the reduction in the price of gold would trigger a market reaction in the form of increased demand and upward pressure on the price.
This graph shows the difference between the total cost of production of the two main gold miners, Barrick and Newmont, and the average annual price of the gold market. If a bank or a few banks started selling gold in short order and were unable to deliver the gold they are supposed to deliver, demand for gold would rise, raising the price of gold (at least physical gold). According to those who fervently believe in manipulation, when the price of gold falls it is the obvious effect of evil conspirators. However, when the price of gold rises, there is no manipulation and real market forces act.
