Report: True Impact Of Interest Rates On The Price Of Gold

truthingold.com / Dave in Denver / May 26, 2015 at 13:29

While the broad media is tirelessly trying to explain and persuade the public that an interest rate hike would encompass a prolonged gold price depreciation a report by Boris Gerjovi would indicate quite the contrary:

There is a lot of talk about an interest rates hike in the media worldwide. As a consequence the decreasing price of gold should follow. However, the task of science is not to repeat what the media have to say, but to put the serious doubt on whatever the media have to say. So, we do believe that the interest rates hike could follow pretty soon, but it’s not the task of this article to discuss if there will be or will not be an interest rates hike. Our intention is actually to show that there is no reason to believe that as a consequence of an interest rates hike there will be a decreasing trend in the gold price. In contrary, the price of gold could even rise and many people could be surprised by this increase.

In recent years mass media are full of articles, in which authors explain how the price of gold is under pressure awaiting interest rates hike. First of all, in most of these articles the following information appears as unsufficient:

Are we talking only about the gold price in US$, or do we have to believe that the fall in the gold price will be present also if we observe the price of gold in other currencies?

Are we talking about interest rates in US, or/and in GB, or/and in Europe, Japan etc.? Especially American media like to discuss about these issue taking only American market into consideration. FED decision about interest rates hike has been seriously discussed now for more than 18 months and as always there is a repeating press conference statement where it stays clear how we should expect such a move from FED pretty soon. “Increasing interest rates should follow pretty soon” is not telling us enough, because it still remains unclear if we are talking about short term interest rates, or long term interest rates. We could imagine that increase in active interest rates would bring as a consequence also an increase in passive interest rates. And we could even imagine that a move from central bank will be followed pretty soon by the moves from the commercial banks – at least in the same country. However, there is surely the need to express ourselves more clear and concrete when we are talking about an interest rates hike.

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