The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Gold: All that glisters: Part 2

I was surprised to see that the gold depo market has gone bid, at least at the front end, which in theory has eroded the negative cost of carry.

I’ve mentioned before that I don’t get gold. I’ve been reading a few bulletin boards and I can’t help but think another huge bubble is building, pumped up by a load of retail Johnnies being seduced by the notion that gold is something of value.


UK gold buyers are lucky that its value has not dropped against sterling like it has against the dollar. However, if you accept that gold is a currency, which it may be, then the gold buyers would have been better off just selling cable.


I was surprised to see that the gold depo market has gone bid, at least at the front end, which in theory has eroded the negative cost of carry. In practice though, I’m not sure many gold owners do lend out their holding. What I have read consistently over the recent past is that gold is a perfect hedge against inflation. Whether or not the same is true for deflation remains to be seen, but personally, I’d prefer to own government bonds, even if there is a flood of issuance coming. As for gold, it looks like a completely rigged market to me – but that may be because I really don’t understand it.



You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree