Ben S. Bernanke, the world’s most-powerful central banker, says he doesn’t understand gold prices. If his peers had paid attention, they might have stopped expanding reserves that lost $545 billion in value since bullion peaked in 2011.
The continuous decline in holdings reflects a further weakening in gold sentiment. The ones who beg to differ are the central bankers who have either held on or added to their gold reserves this year, viewing gold as an important diversifier.
So long as a central bank decides to hold interest rates at a chosen level and is prepared to provide liquidity to any bank that requires it, the central bank stands in the market to offer unlimited quantities of money at the stated rate.
The U.S. Federal Reserve appears ready to begin tapering just as other central banks may be adding to their balance sheets. What will this mean for the global forex market? And remember, this is all data-dependent.
When the U.S. Federal Reserve embarked upon the policy of asset purchases (known as “Quantitative Easing”) in the wake of the 2008 credit freeze, the goal was to stimulate the economy by keeping longer term interest rates low.
After a back injury forced him to re-evaluate his Olympic dreams, Ben Davies found a new thrill in the competition of trading. Now
managing a long-only gold fund, he strives to protect investors’ wealth while advocating for free market reforms around the globe.
Brazil’s real gained the most in a month after the central bank stepped up efforts to arrest the world’s worst currency decline, announcing a $60 billion intervention program involving currency swaps and loans.