Experts dismiss rumors that the US manipulated the price of gold to $10,000
Expert Jeffrey Christian believes that the idea of the US manipulating the price of gold to $10,000 to deal with public debt is illogical, impossible and could cause the government to... go bankrupt.
Theories that the US government has a “secret plan” to reset the price of gold through massive buying or selling are spreading across the international financial network.
However, according to Jeffrey Christian, senior manager at CPM Group, these plans are completely irrational and counterproductive.
The theory of "raising the price of gold to 10,000 USD" lacks basis
Christian disputes the idea that simply announcing the purchase of gold at $10,000 an ounce will cause the market to adjust to that level. He points out that the current price of gold is around $3,430, and if the U.S. Treasury wanted to buy gold at $10,000:
They have to borrow or print money, putting more pressure on the dollar and interest rates.
People and investors will rush to buy gold at low prices, then sell it back to the government at high prices.
After a period of over-buying, the Ministry of Finance will be forced to stop because of “running out of money”, at which point the gold price will immediately return to the real market level – not 10,000 USD.
“That's how to bankrupt the government, not control the market,” Christian asserted.
The plan to "sell gold reserves at high prices" is also not feasible.
Another theory is that the US could sell its 261 million ounce gold reserves at $18,000 an ounce to pay off its debt. Christian points out three absurdities:
First, no investor is willing to pay five times the market price. "Gold is not a luxury item but a highly liquid investment asset. Buyers always want a price close to the market price."
Second, the US simultaneously selling an amount of gold equivalent to two years of global supply (130 million ounces/year) will cause gold prices to fall sharply, not skyrocket.
Third, even if the US sold all its gold reserves at a skyrocketing price of $18,000, it would only get $4 trillion, a pittance compared to its $38 trillion debt. "This plan does not solve the public debt and also deprives the Treasury of its most important liquid asset," he stressed.
Christian asserts that these conspiracy theories are based on emotional thinking or the purpose of causing panic: "It is just empty talk or wishful thinking, completely not based on rational economic analysis. The global gold market is too big for any government to manipulate unilaterally."
He concluded with advice for investors: "Instead of believing in utopian scenarios, monitor fundamental factors such as inflation, interest rates and real demand to assess gold price trends."
