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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: sea_urchin who wrote (22068)	12/2/2004 4:18:10 PM
From: philv	Read Replies (1) \| Respond to of 80957

A few months ago I saw an interview with a Fed Governor commenting on the price of gold. I cannot recall his name or even which particular bank he was governing. But I distinctly remember him saying that he viewed the POG as an indicator regarding interest rates. He said he would periodically pick up the phone to ascertain its price, and that his benchmark was $350./oz. Anything above that level meant that interest rate was too accommodative, anything below, too restrictive. $350 meant that they were right on the money. At that time, the POG was around $350 or slightly below. The point isn't the actual number ($350), but rather someone is at least looking at the POG and using it as some kind of reference. Therefore, the price level, whatever it happens to be, does report, amongst other things, information regarding monetary policy. To that individual anyway. Gold is supposed to reflect a lot of things at the same time. Inflation, interest rates, and the value of the US dollar as well as a safe harbour in case of an exogenous event. And of course, its availability. Big task, so one must guess which one is driving the price at any given moment.