Erb, from the National Office of Economic Research, and Campbell Harvey, a professor at Duke University's Fuqua School of Business, have studied the price of gold in relation to several factors. It turns out that gold doesn't correlate well with inflation. In other words, when inflation increases, it doesn't mean that gold is necessarily a good bet. Sixth, some extreme political conservatives, especially in the United States, promoted gold in ways that ended up being counterproductive.
As things currently stand, the average investor, both retail and institutional, is underinvested in gold-related equity. Those who had the luck or the vision to ride the Golden Railroad in 2001 have experienced five times more investment in the metal of the kings. I have participated in this research, for example, co-authoring the conclusions that brokers charge on gold futures contracts can affect prices. All of this will influence investors deciding to buy or sell gold futures or exchange-traded funds (ETFs) that are listed on commodity indices that include the precious metal.
Nor is it a unit of account; the prices of goods and services and financial assets are not denominated in gold. Therefore, gold remains the “barbaric relic” of John Maynard Keynes, with no intrinsic value and used mainly as a cover against fear and panic, mostly irrational. Therefore, a central bank is always on the wrong side of the deal, even though selling that gold is precisely what the bank is supposed to do. The level of uncertainty about the future of the economy is also important, since gold is considered a safe haven in difficult times.
A serious loss of confidence in the dollar could drive down bond prices and cause yields to skyrocket almost overnight, leaving Bernanke and the company in a tie. Meet the struggling gold miners who are missing out on the rise in precious metals. You might think that anyone in the gold industry would be getting rich right now, but informal miners in many countries are missing out. While stocks have dividends, bonds have coupons and homes provide rents, gold only plays with capital appreciation.
Since then, as gold prices have risen steadily, these miners have been shifting production to lower quality minerals, leading to ever lower production.