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What's Driving Up the Price of Gold?

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  • Description

    RBC Capital Markets global futures SVP George Gero weighs in on the metals market.

  • Duration 3:36
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Metals complex moving lower as jitters grow ahead of Federal Reserve Chairman Ben Bernanke speech in Jackson Hole Wyoming tomorrow morning -- here at RBC capital markets global futures vice president and very good friend of ours here Fox Business Network great to have you well thanks for having me I really enjoy coming here well because you always have such fantastic things in traffic analysis -- also struck in the price of gold these days and.

Let's see today it's being driven down somewhat.

Because there's some other things that took place.

-- before last we have what's called option expiration.

Show on the call marks the trading mechanisms well what happens options on call Max become futures contracts.

Each futures contract is about a fifty to 40000 dollar margin deposit.

If it's exercise.

And it's automatically exercised if the polls are so called him the money.

And these were about 9000 contracts.

Reported to customers' accounts yesterday morning.

And they either have to put up with the additional cash.

To hold on to the gold.

Or traders will always -- by excelling so yesterday's -- is.

Traders thinking about inflation at all because gas prices are on the rise the drought is causing food prices stressed that headline -- -- Inflation's -- been relatively stable so yes it has not -- and not the underlying differences.

Have.

Kept inflation in check the high gasoline prices nobody thinks of a high gasoline prices and not a tax on the economy and it is.

And so spending has not been what people thought it was score to beat today's jobless claims weren't so wonderful.

And then of course disposable personal spending is way down in countries like India.

And the rupee has been very weak so gold has become very expensive.

Interesting.

You had.

Pointed out that in India silver's actually replacing the role of gold because of this gold tax -- seeing some fluctuation there was a golden Sachs that was rescinded.

And the shops to jewelry shops were on strike everybody said chief the jewelry shops on strike there's no business.

But there was they just weren't solid gold it was solid silver.

So the price of gold inflating that 700 dollar an ounce mark is it all reflective of this easy monetary policy well 16100 dollar priced are.

Okay 16100 dollar price of gold actually it's a double since the 1980s.

And while the dollar has depreciated some say 25 -- 30% target save the euros from other currencies.

It actually.

I was a phenomena people who live in Argentina or Greece or Italy or Spain they buy gold because its convertible.

Liquid portable.

And maintains purchasing power but they also have been -- the dollars.

So you have this phenomena -- possibly while the dollar may not.

Totally gold down to drain because people are buying dollars.

It the gold is also -- Some of the big banks Goldman in particular predicting 17100 dollars an -- -- 18100 dollars and -- if -- from the other analysts we're almost there is a matter Freddie disrespect coffee 6060.

So another hundred dollars is very possible.

In what -- Gold may be by the end of the year -- had begun what headlines come out of Europe.

The Far East.

And the Middle East people forget that there are still problems.

Iran and so forth in the Middle East great leading indicator thank you for spelling out all the reasons and influences on the precious metal -- sheriff question to see you think thank you for having me.

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