What drives the price of gold? Part 1
“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.
Chart courtesy of Merk Investments