In what sounds like the setup for a stylish Hollywood heist movie, Germany is transferring 635 tonnes of gold bars worth $36 billion US from Paris and New York to its vaults in Frankfurt.
The move is part of an effort by Germany’s central bank to bring much of its gold home after keeping big reserves outside the country for safekeeping during the Cold War.
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As i have been tracking this yellow metal since more than a year, with its price movements, its correlation to Dollar Index, the amount of reserves accumulated by the developed and top emerging countries, the yield curve of US treasury bills; one thing i have noticed and i would like to share with everyone. No matter how hard we push ourselves with the belief that the gold is related to above of the parameters it draws down to one simple conclusion.
Gold, which has been used as a better known tool for hedging purposes by many individuals, corporate and so do countries for that matter, it would be still be majorly driven by the appetite of speculators who have been the master players in this yellow metal. As long as they (speculators), keep up the bullish sentiment on this piece of metal, it would be difficult for gold to correct to its real value. Which brings me to belief that, the value of gold at present doesn’t represent its real intrinsic value. In a way, its more of a bubble over the years and may be sometime soon a large number of investors say it; individuals, corporate, countries or even for that matter speculators would start realizing this and would start re-positioning their portfolios to better/real return in coming year.