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? 

Last week, I wrote that it was highly uncertain whether the Fed, as it had promised, would raise interest rates twice more this year. The fact that gold prices initially reacted positively on the rate hike in mid-March, might indicate that the gold market also questions the future rate hikes that the Fed promised.

I finished last week by saying that I would comment on another fact of utmost importance with repercussions for precious metals markets. Here it is.

There is, indeed, another

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 York to the Netherlands. Wat did Aerdt Houben of DNB say about investing in gold and what could we comment?