Gold below 1200 USD/oz
Gold price has today fallen below 1200 USD/oz. This corresponds to a price of appr. 38500 USD/kilo.
The scenario is that the gold will drop further down when the Federal Reserve is starting to decrease its investments in bank instruments.
The US national bank has after the turmoil from 2008 and the fall of Lehman Brothers Bank been assisting the banking system by buying bank instruments . They have been feeding the banking system with 85 billion USD per month for a long time. Yesterday was the first day of a decreased pumping out of funds. They reduced with 10 billion USD per month.
This is bad news for the gold price and also for the miners. It is actually bad news for the whole industry. A fall of the gold price in only one day of 3% correspnds to a big loss along the system.
The value of the inventory at the jewellers are decreasing. In Sweden there is another problem. The pawnshops are loosing money and has to reduce their workforce as the gold will not be rebought by the persons financing themselves by leaving gold objects at the pawnshops.
The buyers can not sign longterm contracts and with a margin between the purchase price and the sales price after refining and all costs may end up with a loss.
Stable prices as in the past is much better than speculatative pricing. This pricing has also been driven by the banks. The banks have been printing gold just as they have produced bank instruments. They have sold papergold which they call CFD. The document corresponds to a given quantity of gold. This has led to a wave of speculation that has not had anything with reality to do.
To me it looks like the goldprice development of 1979. You have to start to think that this is the end of the story when the banks starts to open gold accounts and create a new currency the call “gold”.
It is not there is no way that they can deliver all the gold they have printed.
It was different in the old times when Ian Fleming wrote is book, Goldfinger, then gold was gold.
