Why the Price of Gold Is Plummeting: Six Theories

If you’ve been thinking about pulling out your gold fillings, or melting down the gold wedding ring your ex-wife threw in your face, you’d better get on with it. The way gold is trading on the financial markets, it won’t be worth your while unless you act soon. In the past two days, the spot price of the precious metal has fallen by almost a hundred dollars, to one thousand three hundred and seventy-five dollars an ounce. It’s the biggest two-day fall in thirty years. Since November, the price is down about four hundred dollars—or about twenty per cent.

Why’s this happening? The proximate answer is because traders are selling. Beyond that, nobody knows for sure. Trying to explain what’s happening in a speculative market like gold is a bit like trying to say why lightning strikes one place but not another. We know the general principles involved, but beyond that it’s mostly guesswork. Still, here are six theories, which I’ve ordered by increasing plausibility.

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