Gold is rebounding. News that the Bank of Japan set a 2% inflation target and is buying 13 trillion yen worth of assets ($146 billion) rallied gold prices Tuesday, to near a one-month high of $1,697.80 set last week.
That’s not surprising since gold, more than any other commodity, rises and falls along with changing government policies globally.
Germany made even bigger splash than Japan in the gold market recently with its surprise announcement last week that the Bundesbank would begin repatriating gold reserves held overseas. The central bank said it wanted to keep more than 50% of its gold reserves at home, up from slightly less than one-third currently. With that in mind, the Bundesbank will move all its gold reserves now held in Paris back to Germany, and reduce its reserves held in New York City.
“Germany is saying that gold is money,” says Jim Rickards, author of Currency Wars: The Making of the Next Global Crisis. Otherwise, says Rickards, they would just leave the gold where it currently is stored.
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