On various occasions I have written on how the gold price is determined. Some people, however, still insist that there exists a disconnect between “paper gold” and “physical gold.” This myth is a result of a complete misunderstanding about how futures markets actually work. This time around, we will look at some arguments of several colleagues in the gold industry. What is the reason that the physical and futures market cannot have an isolated existence from each other? 

I admit. My response to a recent interview is overdue. Last year, the Dutch financial newspaper Financieel Dagblad (FD) published an interview with Aerdt Houben, director of Financial Markets at the Dutch central bank, De Nederlandsche Bank (DNB), discussing that beautiful shiny precious metal we are so interested in: gold. Of course, there has been enough commotion about DNB and its gold reserves. DNB repatriated, for instance, in utmost secrecy over €4 billion euro worth of gold from New

The central banks of the three developed economies – the U.S., the Eurozone and Japan – have expanded their balance sheets tremendously over the past decade. More than $12.2 trillion of financial assets now sit idle on their balance sheets. One of the consequences is that the central bank’s traditional toolkit has become obsolete. Central bankers count on one tool and one tool only. However, the effectiveness of this tool, especially in times of high and increasing inflation, is completely shrouded in mystery. Balance sheet reduction is one possible way to shrink the balance sheet so that traditional tools might be used, but how? And what are the consequences?