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20/03/17
15:17
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Originally posted by Proctalgia
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Rising real interest rates = POG down;
Falling real interest rates = POG up.
(All else being equal)
As opportunity cost of holding Gold rises, money will move away from it at the margins. That is, some people/institutions will move some part of their money into risk-free fixed interest instruments.
Remember also that rate rises are telegraphed to the market weeks, if not months ahead, so the impact on POG of rate changes will be witnessed in the lead-up to the actual announcement.
This is my experience and understanding.
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So most of the gold traded is paper gold, and very little is actually physical bullion.
I know the opportunity cost of holding physical bullion, as I have some.
What is the opportunity cost of holding paper gold ? as a speculator in futures contracts..?