On Friday, gold declined over 2% and silver lost nearly 7%. The scale of the losses, particularly for silver, surprised participants as there was no breaking news story and markets had largely priced in a no victory in the Swiss gold referendum.
The Chinese government acknowledged gold as a strategic asset in 2000, when it included the establishment of an open gold market in its five year economic plan. Since then China has come to play a significant role in the international gold market as it strives to develop and advance all aspects of the industry and gold’s role in the domestic market.
Everyone knows that gold and silver have value, but few people understand their real value. Some people say that the current price of gold and silver is too high after rising 12 years. But is that true?
Demand for gold is likely to rise as the world heads toward a multi-currency reserve system under the impact of uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds.
Somewhere deep in the bowels of the world’s Western central banks lie vaults holding gargantuan piles of physical gold bars… or at least that’s what they all claim. The gold bars are part of their respective foreign currency reserves.
If the single currency experiment succeeds, an accurate gold accounting will just be “icing on the cake.” It will add little to bolster confidence in a currency that over time proves successful. But many still have doubts whether the euro will survive.