Gold at ATH.....what do your tea leaves say?

[Pirocco]

Banks don't lend reserves regardless, paying interest on reserves held on the balance sheet of a CB is not a method to curb price increases. It's a method designed to curb yield.

Yep, QE raises demand for bonds by CBs, increasing the price while lowering the yield. Funds and other agencies go looking for yield in other markets driving up the price of those assets to make up for the lower return in bonds.

True if you don't include jewellery and investment demand.

The majority of Central Banks don't give a shit about what the price of gold is doing because it's largely irrelevant to how they function.

Why did central banks sold gold during the 199x and earlier 200x, its price driven to $300?
Answer?
Why did central banks buy gold during the later 200x and continued that last year?
Answer?

You say they don't give a shit, and gold is irrelevant for them, but, ehm, they DO trade it.
That is as contradictionary as an antiques shop that isn't interested in antiques.

 

[mmm....shiney!]

Why did central banks sold gold during the 199x and earlier 200x, its price driven to $300?
Answer?

In order to manage risk.

Why did central banks buy gold during the later 200x and continued that last year?
Answer?

In order to manage risk.

You say they don't give a shit, and gold is irrelevant for them, but, ehm, they DO trade it.
That is as contradictionary as an antiques shop that isn't interested in antiques.

All antique shops deal in antiques. Not all antique shops deal in the same style of antique.

 

[mmm....shiney!]

Note the absence of high income Western economies that issue their own sovereign currency in the list below:



Of course Poland uses its own currency at the moment, but it's under obligation to eventually replace the Zloty with the Euro. Probably why its trying to stack as much gold as it can now.

 

[mmm....shiney!]

Central banks aren't manipulating the price of gold. They've got bigger markets with which to contend.

 

[Ag bullet]

BTC?

 

[Jislizard]

Central banks aren't manipulating the price of gold. They've got bigger markets with which to contend.

Why not both?

I am sure they have a separate department for everything that can be manipulated, you could even give it to the intern or new hire to practice on.

 

[mmm....shiney!]

Why not both?

I am sure they have a separate department for everything that can be manipulated, you could even give it to the intern or new hire to practice on.

Why would they bother?

If people want to believe that the government manipulates the price of gold then I guess nothing is going to change their minds.

 

[mmm....shiney!]

BTC?

Manipulate the price of BTC?

 

[Jislizard]

Why would they bother?

....

Money, power, control, the usual.

 

[mmm....shiney!]

Money, power, control, the usual.

As the monopoly issuer of currency they have that anyway.

 

[Jislizard]

Fiat currency maybe, but eventually all fiat currency becomes obsolete.

Gold will endure and is a competitor.

 

[mmm....shiney!]

Fiat currency maybe, but eventually all fiat currency becomes obsolete.

Why is that?

Fiat will only become obsolete if the State collapses, and if that ever happens then a new State will just issue another fiat currency it will have a monopoly over.

Commodity backed currencies are a rarely implemented relic of a very small past.

 

[Jislizard]

Commodity backed currencies are a rarely implemented relic of a very small past. However the commodities themselves can be implemented. Gold and silver can be used without the need of a currency or any central bank involvement.

People will need to have faith in the fiat currency in order for them to use it, either that or the use of force. The Zimbabwe fiat currency is so worthless that no one in Zimbabwe uses it if they have to. Even the new Zig, allegedly backed by gold, is not trusted. Venezuela also has a fiat currency that is failing and their bank has the monopoly over that. Argentina too. We are just too used to a working currency that we haven't found the need to look for an alternative.

 

[mmm....shiney!]

However the commodities themselves can be implemented. Gold and silver can be used without the need of a currency or any central bank involvement.

True. I haven't got an issue with alternative forms of exchanging value existing under an overarching government issued fiat system.

People will need to have faith in the fiat currency in order for them to use it, either that or the use of force. The Zimbabwe fiat currency is so worthless that no one in Zimbabwe uses it if they have to. Even the new Zig, allegedly backed by gold, is not trusted. Venezuela also has a fiat currency that is failing and their bank has the monopoly over that. Argentina too. We are just too used to a working currency that we haven't found the need to look for an alternative.

The problem for the vast majority of countries in the world is that a government issued fiat system really only works effectively in those nations with advanced economies built on stable financial, legal and political systems. Any other currencies are just tickets to a front row seat in the demise.

 

[Pirocco]

In order to manage risk.
In order to manage risk.
All antique shops deal in antiques. Not all antique shops deal in the same style of antique.

You repeat instead of answer.
Which risk?
Caused by who?
My answer on that was fighting speculants.
When these buy gold, CB's buy gold too, driving price upwards, inflict speculants less ounces.
When these sell gold, sell too, downwards,less dollars.

So, speculants have to "manage risk" too, by speculating on something else, that its price was driven up less.
That's quite obvious, also already said, but you seem to be stuck in some denial mode without an explanation.

Also, it doesn't matter which central bank / country buys or sells gold, a price is driven by tonnes buy/sell orders, not by who places the orders.

 

[Pirocco]

Why is that?
Fiat will only become obsolete if the State collapses, and if that ever happens then a new State will just issue another fiat currency it will have a monopoly over.

That's all stretched way too far.
Golds price drives on bad economic news = whatever currency > gold.
Good economic news = gold > whatever currency.
Who decides good or bad economy: mother nature and central banks, 99% of the time the latter, and they act in golds market accordingly.

 

[mmm....shiney!]

You repeat instead of answer.

I repeated the answer.

Which risk?
Caused by who?

Here you go...

Also, it doesn't matter which central bank / country buys or sells gold, a price is driven by tonnes buy/sell orders, not by who places the orders.

Of course it matters. There's a clear distinction between central banks that buy/sell gold and those that don't.

 

[mmm....shiney!]

CBs hold gold on their balance sheets. That's a fact. Clearly there's 2 schools of thought in this debate as to why they hold gold.

1. Individual CBs hold gold as an FX reserve in order to mitigate risks associated with their domestic currency, financial institutions and economic conditions. (My view)

2. Collectively CBs hold gold as an FX reserve on their balance sheet and act in unison to manipulate the gold price. (@Pirocco's view)

 

[Pirocco]

Fiat currency maybe, but eventually all fiat currency becomes obsolete.
Gold will endure and is a competitor.

It only competes at a certain price, just like anything.
It's all relative.
25 years ago for $3000 you got 10 ounces gold.
Now you get 1 ounce. That's / 10.
25 years ago for $200000 you got a house.
Now you need $500000. That's / 2.5
Gold got 4 times more expensive than houses got.
That's +300% house purchasing power.
Profit gets grabbed, but takes a buyer, and that's the reason for the inverted to reality investment news.
The same individuals and companies that spread positivism at what will turn out to be the end of a bull market, spread negativism at what will turn out to be the end of a bear market.
For that reason, see the single example case from 2011 kitco forum I gave here.
Remember this:
https://en.wikipedia.org/wiki/Operation_Enduring_Freedom
?
The freedom "endured" 15 years.
Golds price increase:
https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
... is now, relative to other price increases (this is inflation adjusted) as high as it was in 1980.
... what followed was 2 decades where gold devalued, not only due to former stackers cutting losses by running, but also due to governments selling stocks.
After those 2 decades, 2000+, stacking restarted (due to price increases caused by the War On Terror government spendings), AND, governments restarted stacking too, not in a hurry, just gradually together with / following speculants. Because it needs time to convince people to pay more and thus receive less ounces.
In contrast to frontrunning, there the element of surprise, the inverted mood spread mentioned above, matters.

 

[Pirocco]

CBs hold gold on their balance sheets. That's a fact.

They also sold gold, that's also a fact.

Clearly there's 2 schools of thought in this debate as to why they hold gold.
1. Individual CBs hold gold as an FX reserve in order to mitigate risks associated with their domestic currency, financial institutions and economic conditions. (My view)

Those risks origin not from earthquakes or elephants, they origin from speculants.
Why central banks were created: to prevent that people on markets rout out bad money.
That's why central banks cooperate, if people don't trust euro, thus swap it for ex for dollar, causing the former to decrease value and the latter to increase value, the euro central bank ECB sells dollar reserves to the FED, and the FED buys euro reserves from the ECB. "Currency swap".
In the quantities needed to keep euro and dollar within a certain trading range.
This happened in the EU before their common currency:
https://en.wikipedia.org/wiki/Snake_in_the_tunnel
Their only use for gold is to drive its price up or down, up when speculants buy it, down when speculants sell it.

2. Collectively CBs hold gold as an FX reserve on their balance sheet and act in unison to manipulate the gold price. (@Pirocco's view)

They don't use gold as "reserve".
https://www.fiscal.treasury.gov/reports-statements/gold-report/

The book value of gold is currently $42.2222 per troy ounce. The information used to compile this reporting is received from the U.S. Mint, Federal Reserve banks, and the Bureau of the Fiscal Service.

In their bookkeeping they price it as $40/ounce, while the market price is $3000.
https://fiscaldata.treasury.gov/datasets/status-report-government-gold-reserve/

The book value is not the market value, but instead represents the total number of troy ounces multiplied by a value established by law ($42.222), set in 1973.

That's because they don't see gold as an asset to gain value.
They sell it low.
They buy it high.
Rather the contrary: they hunted losses.
Because their sole remaining use for gold, was ment to inflict speculants less ounces and less dollars.
The losses they make on gold do not matter, because their trading partners are the bullion banks, which are their buddies.