That figure you’re fixating on, the gold price per ounce, is essentially the collective anxiety meter of humanity. One day it is flying like an eagle; the next it is falling like your phone in a parking lot. What therefore does the value of this shining rock seem to wander like a caffeinated rabbit?
Gold per ounce is a story, not only a price. Investors are the worried onlookers, miners are the exhausted heroes, and central banks are the antagonists in a messy, dramatic tale. As you read this right now, a trader in a wrinkled suit is most likely making that number twitch simply by sneezing improperly.
The magic number originates in London. Not the London Bullion Market but the London Eye. Many bankers gather twice daily to decide the “fix” pricing. It resembles fantasy football except with real gold bars. Futures traders are laying wagers in New York and Shanghai that would cause a Vegas bookie to flush.
The worst is the per-ounce pricing you observe here. That speaks to 400-ounce “good delivery” bars. Only governments and banks trade; the kind hardly does. Search for a lovely small coin. Add five to fifteen percent premium faster than a last call bartender. The markup is more the smaller the piece; gold’s form of shrinkflation.
Gold is hard to acquire using the dollar. Gold usually sulks when the greenback struts. For what purpose? For everyone else, a strong dollar makes gold more expensive. But when inflation shows its nasty head? Gold radiates more brilliantly than a politician’s smile. This has been the case since Nixon destroyed the gold standard; the metal still tastes salted about it.
Demand with supply? more akin to supply and “oh damn.” Mines don’t develop in a decade. Most of the simple gold has already been extracted. Right now, we are literally scroubing the bottom of the barrel. Central banks are purchasing like Black Friday 2008 in meanwhile. China has been building like there is no tomorrow (maybe they know something).
Would like to properly grasp the per-ounce game? Track these three things:
Real rates of interest: gold dislikes positive ones.
The DXY dollar index, our frenemies
COMEX future position (speculators gone crazy)
Fun fact: Although Gold’s daily motions seem haphazard, most large jumps occur while New York is asleep. While Americans slobber on their pillows, Asia and Europe love shifting the market. Unless you like waking up to financial heart attacks, set price alarms.
Here’s the nasty secret nobody tells you: per-ounce price is essentially fictional. Years have seen the rupture between the physical market (real metal) and the paper market (futures). Every actual one corresponds to roughly one hundred “paper ounces”. Under what circumstances may things go wrong?
Gold’s price per ounce ultimately reflects society’s agreement that this precious metal is more important than it ought to be. We dig it at great expense to bury it once more in vaults. Obviously makes perfect sense. Simply said, avoid thinking too much; your brain might melt in a furnace faster than a gold bar.