Dr Stewart Murray took over as CEO of the London Bullion Markets Association (LBMA) just over a month ago. Prior to that he was the CEO of London-based Gold Fields Mineral Services (GFMS) till June 1998. His stint as CEO of GFMS was almost for 10-years when he extensively covered Middle-East and India. In the last one year he was the chief economist at GFMS. In an e-mail interview with Sanjiv Arole of FE Thinktank he expressed his personal views on a number of issues on the gold.It is said that water finds its own level. Where do you think is gold’s correct price level?
I would not try to suggest that any particular price is any more correct than any other. Just as ground-water levels change with the season and the prevailing rainfall pattern, so will the -- quilibrium -- gold price change with changes in market sentiment and macro-economic environment. In an efficient market, changes in such factors result in the price finding a new level almost immediately. The art of price forecasting is to suggest the likely future direction in prices in response to a postulated set of circumstances.
Given the recent trend wherein most central banks, including the Australian, BoE, the Swiss, the Russians and a host of others have sold gold, how long will the French, German and the Americans continue to hold gold?