Is the Price of Gold Manipulated?
Dirk G. Baur
University of Western Australia - Business School; Financial Research Network (FIRN)
August 14, 2015
FIRN Research Paper
An increasing price of gold provides signals about the value of fiat money and can influence confidence in the financial and monetary system. Central banks therefore have an interest in gold price movements. This paper summarizes the main arguments for central bank gold price management, it replicates commonly used analyses to support the claims of price suppression and presents new statistical evidence. Conversely, we find no clear evidence of gold price suppression and provide explanations for apparent anomalies including liquidity, investor behaviour and the gold carry trade. Despite statistical evidence against central bank gold price manipulation, the size of the gold market and the global role of gold as a thermometer for the value of fiat currencies render it difficult to comprehensively dismiss claims of manipulation.
Number of Pages in PDF File: 32
Keywords: gold, manipulation, central banks, gold lending, gold carry trade
JEL Classification: E30, E40, E50, F33, G14
Date posted: September 17, 2013 ; Last revised: August 14, 2015
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