What drives the price of gold? Part 1

The Gold Observer/Jan Niewenhuijs/11-18-2021

“In my opinion it is important to understand the current framework, if only to question its longevity. Since 2006 the price of gold in U.S. dollars is inversely correlated to (expected) real interest rates derived from the 10-year U.S. Treasury Inflation Protected Security (TIPS), as you can see in the chart below. This correlation is what I refer to as the current framework.”

USAGOLD note: Niewenhuijs explores the factors determining the gold price – a solid briefing for the beginner and a refresher course for gold investing veterans. Highly recommended.

overlay line chart showing the real rate of return and the gold price 2017 to present
Chart courtesy of Merk Investments

 

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