Why Gold is A Manipulator’s Nightmare

From 2003 to 2014, Deutsche Bank manipulated the daily price of gold. In the past, they set gold prices in conjunction with four other banks through phone calls, and they positioned themselves before releasing the prices to the public. Of course, this archaic means of price-setting was done away with, but this situation showed gold to be uniquely manipulable. This should raise some concern for anyone interested in buying gold. Throughout the 20th century, numerous central banks and supporters of fiat money found ways to suppress the price of gold and prop up their own currencies. While gold has been continually manipulated, several recent developments have made it much more resilient to control. Higher numbers of gold buyers have decreased the ability of any one buyer to manipulate the price. Deeply interconnected international trade networks have also made price distortion nearly impossible. Finally, real time granular data has made price manipulation activity much more difficult, though not impossible. While proponents of unstable money will keep trying to find a way to devalue gold, their task becomes continuously more difficult.

It might be extreme to attribute all of the increase in gold holding to the weakness of the dollar, but the weak dollar is the most fundamental driver of gold’s increase in use. There has been a huge surge in central banks holding gold, and doing so at great volume. The weakened dollar and the US’s step back from being the respected world leader it once was means that central banks are scrambling to fill the void with the one asset that best hedges against the dropping dollar. From knowledgeable finance professionals to freedom-oriented preppers, retail investment in gold has also increased throughout the world. All of these appetites for gold make it much more difficult to drop the price. A wider range of people are willing to view a lower price of gold as an opportunity rather than a sign to step away. While in the past gold was bought by a smaller subset of institutions and investors, there is now a broad coalition willing to buy gold even at all-time highs.…