Gold has remained more or less range bound between $1630 and $1660 an oz. since mid March but what has caught our eye during this period are the occasions when a sharp down spike has occurred to be shortly followed with a return to around its previous level.
Although we are far from sure, it is a distinct possibility that this is a manipulative move emanating from the US Fed or some other central bank attempting to undermine confidence in the gold bullion market for the benefit of the dollar and other fiat currencies.
If so, then it could be said to be working in so far as it has kept the price range bound, that is free from the attentions of the ‘big boy’ hedge funds and speculators but does not seem to have shaken out the long term faithful gold investors to any large extent. Of course, they know that you cannot print gold!
Most Bankers Believe Gold Is A More Attractive Investment
At the same time it is reported that central banks have taken the opportunity to stock up by purchasing some 440 tons in the last year, anticipating that paper currencies are a riskier asset to hold in their reserves than gold.
A recent poll by GoldCore suggested that 71% of those bankers participating believed that gold was a more attractive investment than at the beginning of 2011.
With Ben Bernanke signalling another round of QE, or whatever it will be called next, ever more strongly, and much of Europe likely to follow suit as its situation continues to flounder, and Japan already committed to further monetary stimulus, those printing presses will be working even harder churning out paper that will become increasingly devalued.
That will not happen to finite assets such as gold, other precious metals or even land, you simply cannot print gold and that, in a nut shell, is why gold has been the preserver of wealth throughout the ages. It is, and always has been, the defence against the the erosion of value of any currency that does not have its guaranteed backing.