Gold and Terrorism
In
the recent times, gold prices have been known to show much fluctuation.
For example, from 2008-2013, gold prices rose by about 200% and touched
an all-time high figure of $531.98 per 10 grams. Since then, it has
been witnessing a decreasing trend with the current price being $430.28
per 10 grams. The unprecedented rise was primarily due to global
economic downturn, which led investors seeking for gold rather than
other failing financial instruments. In the context of gold prices, it
is important to understand the underlying forces which naturally or
artificially control the gold prices.
Impact of global market indices and Oil prices on gold
The global indices are known to have a significant impact on the gold prices worldwide. From December 2013, when the US NASDAQ rose by 10%, France’s CAC rose by 4.4% Germany’s DAX rose by 2.78%, and Brazil’s Bovespa rose by 13%, the attractiveness of gold as a safe haven has declined. This in turn has also contributed in generating a 5% fall in the global gold prices to $1,218/- troy ounce. The simple reason being that, when interest rates rise, the yields on bonds and other money market options also rise, thereby making them more attractive to investors in comparison to gold. Secondly, the prices of oil are also believed to drive the price of gold to a large extent. It is believed that higher oil prices indicate dampening growth and as a result investors get motivated to look for alternative sources of investment like in gold.
The global indices are known to have a significant impact on the gold prices worldwide. From December 2013, when the US NASDAQ rose by 10%, France’s CAC rose by 4.4% Germany’s DAX rose by 2.78%, and Brazil’s Bovespa rose by 13%, the attractiveness of gold as a safe haven has declined. This in turn has also contributed in generating a 5% fall in the global gold prices to $1,218/- troy ounce. The simple reason being that, when interest rates rise, the yields on bonds and other money market options also rise, thereby making them more attractive to investors in comparison to gold. Secondly, the prices of oil are also believed to drive the price of gold to a large extent. It is believed that higher oil prices indicate dampening growth and as a result investors get motivated to look for alternative sources of investment like in gold.
Financial terrorism in the gold market
It is significant to realise that, in contrast to the common belief, the price of gold is not determined in the markets where gold is bought and sold physically, but rather in paper futures markets, where trade speculators place their bets on gold prices. The big hedge funds trade the various gold futures. When they buy, they pre-assign a ‘stop-loss’ order within their computer programs. The purpose of this stop-loss order is to sell at that specific price automatically.
It is significant to realise that, in contrast to the common belief, the price of gold is not determined in the markets where gold is bought and sold physically, but rather in paper futures markets, where trade speculators place their bets on gold prices. The big hedge funds trade the various gold futures. When they buy, they pre-assign a ‘stop-loss’ order within their computer programs. The purpose of this stop-loss order is to sell at that specific price automatically.
On the
other hand, the billion banks have complete access to the computers and
can see all the ‘stop-loss’ points set by the hedge fund companies.
These billion banks as a part of their strategy purposely dump in large
contracts by selling futures in large amount, with the intention of
shorting gold. The purpose is to force the market low enough to
auto-trigger the stop-loss orders to be executed. For example: Contracts
representing massive amounts of gold in several tons could be sold
within a few minutes taking the gold price down drastically and
triggering a massive selling of futures at the ‘stop-loss’ level.
Eventually, the banks use the selling from these hedge funds to generate
trading profits, as they cover their positions of ‘short’ at a price
level that is lower than the price level at which their positions of
‘short’ were established. This is how inside training and financial
terrorism operates and banks make money from the manipulation
implemented on the futures market.
Thus, these aspects of inside
trading performed by billion banks in the futures trade, act as the
artificial agents to control gold prices, and thereby contribute towards
‘Financial terrorism’.
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