The Gold Report: The gold sector entered full-blown panic mode in July with the Bloomberg analysts forecasting a dip below $1,000 per ounce ($1,000/oz) this year, and Deutsche Bank forecasting $750/oz. Is this just fear feeding on fear, or is there something else going on?
Jeffrey Mosseri: It is fear feeding on fear, but there are two other things going on. The first is the strength of the dollar, and the second is the weakness in the price of oil. Combined, these two factors have greatly and negatively affected the prices of all metals in U.S. dollars. Over the past year, gold is up 20–40% in many currencies.
TGR: In the last couple of years, the idea that the price of gold is being manipulated downward is no longer dismissed entirely as a conspiracy theory.
“Commerce Resource Corp. recently announced excellent drilling results at its Ashram rare earth deposit.”
Douglass Loud: I wouldn’t want to use the word “manipulation,” but you could have an analyst predicting a gold price of $1,050/oz, followed by someone on the trading desk shorting it down to $1,050/oz, without any collusion.
TGR: How big a role does China have in setting the gold price?
JM: The biggest purchaser of gold in 2014 was the Russian central bank. China was second. This year, as gold has fallen below $1,100/oz, imports to China are headed for a record. I wouldn’t call this manipulation necessarily, but the Chinese are definitely taking advantage of the lower price, as are the Russians, the Indians and the central banks of many other countries.
TGR: It is rumored that China intends to float a new reserve currency, backed fully or partially by gold bullion. What effect would this have on the supremacy of the U.S. dollar?
JM: The U.S. dollar remains, …read more