Menu
Share
Share this story
Close X
 
Switch to Desktop Site

Gold bull market on the horizon?

(Read article summary)
View video

Arko Datta / India Business / Reuters / File

(Read caption) An employee of a Mumbai bullion house shows gold bars in this file photo from Dec. 3, 2009. If Europe's central banks will no longer sell gold bullion, the price should increase beyond its recent record-breaking highs.

View photo

After having sold gold every year for more than a decade (Gordon Brown infamously sold large amounts of gold in 1999 when gold was trading at $250 per ounce), it now seems that they will stop selling gold.

This is bullish news for gold. Not because central bankers are good analysts, of course. If that had been the issue, this announcemnt would in fact be a bearish signal, given the central bank track record of foolishly selling gold only to see the price rise afterwards every year during the latest decade.

About these ads

No, the reason why this is bullish is that this first of all will limit the supply of gold, something which will directly cause the price to increase. And secondly, one reason why they might be keeping their gold is because they plan to pursue even more inflationary policies in the future, something which is obviously bullish for gold as it is an inflation hedge.

------------------------------

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here.


Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.