View from City Road: Gold may glitter but it's still a risk
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The word among the gold bugs yesterday was that the investment guru George Soros has not, after all, got out of the market. He retains some of his physical gold and his stake in Newmont Mining Corp, an investment that is highly geared to the gold price. However, there are good reasons for treading warily.
No one can know precisely what Mr Soros's interests are, or whether he was selling while letting it be known that he was an investor, all the better to ramp the price. Moreover, Mr Soros is quite capable of mistakes, as his record in the 1987 crash, the short-selling of the mark at the time of the European currency crisis, and his stake in the consortium that bought Imry Merchant Developers at the UK property market peak shows.
The gold market is also intrinsically volatile. Chinese demand fell back in the second quarter, and the full recessionary impact of the government's stabilisation policies has yet to be felt. Although global yields on alternative investments are falling, they are still higher than inflation - and gold is entirely yieldless.
The sudden sell-off from a high of dollars 408 an ounce was revealing, since it was due to fears that the Bank of France might sell its gold to rebuild its reserves of foreign currency. There is a real risk of a central bank sell-off. Worldwide, central banks and other official bodies hold 35,000 tons of gold, or nearly 70 years' worth of production. That is some overhang.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments