Gold: Turbulent Times


After a rather quiet first half in 2019, we have been experiencing a wild roller coaster over the last three months. At the beginning of September, the gold listing rose to an all-time high, measuring in at €45.30/g. Although this is a positive turn for the industry, it is interesting to note that while the media has been busy reporting the rising gold price, the record highs of 2011 and 2012 are reported as still being far away. Such reports may seem contradictory, but it must be remembered that the press almost exclusively reports the current gold price in US dollars and troy ounces, therefore making both reports correct on account of fluctuating exchange rates.

During the gold peak experienced in 2011/2012, the USD was very weak, whereas today, it is trading more steadily at around €1.1000/$USD. Firstly, this shows the major impact of currencies on the gold price, and secondly, that it is worthwhile to look more closely at the currency in which the gold price is specified.

The current price drivers are the imminent negative interest rates, and should these be introduced nationwide for private savers, we would see further price potential for gold. It is not that the negative interest rates would particularly affect the individual, but rather they would influence the behaviours of such individuals as many small savers would most likely withdraw their deposits in order to avoid losing money.