Coordination of Private Banks and Central Banks

Abstract

It is, therefore, in the carry traders’ self-interest that the gold price falls. Their interest is of a commercial nature; they want to make profits. At the same time it coincides with the political interest that several central banks have in a gold price that doesn’t rise (this will be discussed later). The central banks in turn could intervene in the market directly. They have already done so quite often in the foreign exchange and gold markets, both openly and covertly. However, in this instance they don’t need to, or only to a limited extent. They don’t need to be active in the market themselves, but can ‘delegate’ some of the work to the bullion banks. Those simply pursue their commercial interests when they take actions against a rising gold price.