Voima Weekly #12 – The Real Price of Gold

100 gram gold bars.

The price of gold is determined in the market just like any other commodity or security: buyers and sellers meet, and a price is formed. The only difference is scale — daily gold trading amounts to hundreds of billions of dollars, taking place across global marketplaces and financial centers. In recent months, major asset managers and banks have been racing to raise their gold price forecasts.¹

Their gold price forecasts rely on a few key drivers. First come the macroeconomic factors — real interest rates and the strength of the U.S. dollar.² Their combined effect defines gold’s “base path”: the lower the real rates and the weaker the dollar, the higher the gold price tends to be. Next, analysts look at investor flows — money moving in and out of gold-backed ETFs, futures, and options — to gauge whether sentiment is bullish or bearish. Third are physical fundamentals, especially central bank purchases and sales, which can shift the entire market balance. Finally, market structure signals matter: movements in LBMA forward and lease rates, or local premiums in China and India, often reveal the real direction of demand. Many research houses, including the World Gold Council’s Qaurum model,³ combine these variables into regression frameworks: the macro scenario sets the baseline, while ETF flows, COT data,⁴ and central bank buying adjust the final valuation up or down.

All of the above may sound complex, so let’s move beneath the forecasts — into the real world. Imagine you’re a third-generation entrepreneur in Turkey, where your parents and grandparents have always said: “We keep our money in gold.” You’ve seen why. In just ten years, your currency has weakened against gold by nearly 5,000%— one hundred thousand in cash would have become five million if it had been in gold.⁵ Or picture an Indian homemaker, who has inherited and bought gold across generations — not only as an investment, but as beauty and security.⁶ Or a German saver, who knows what inflation can do.⁷ Or a central bank holding thousands of tonnes of gold — why would you sell? And then there’s the bank that doesn’t yet have gold, but wants a seat at the big table. Gold is power — tangible and quiet. Or imagine being an institution sitting on billions in bonds, watching how debt crises are “solved” by slowly, sometimes abruptly, inflating them away.⁸ In that world, money you can’t print starts to look very attractive.

Gold’s price doesn’t rise out of nowhere — it rises when people and institutions return to it. Central banks have been net buyers for more than a decade, and Asian households tend to buy gold when they have a surplus, or sell it when they can trade it for something tangible — a house, land, or a business. Gold has always been money. There are times when people want to stack it, and times when it rests. La Belle Époque — the original “golden age” — was that because gold itself was official money.⁹

Today we live in a fiat system with a built-in flaw: constant deficits and an ever- expanding money supply that slowly erode purchasing power. That defect enabled governments to borrow without end — the birth of Big Government. Big Government doesn’t just mean a large state; it means a state that has forgotten the boundary between itself and its citizens. It grows quietly: first come the promises, then the borrowing, and finally control through debt. When money is no longer tied to anything real, everything seems possible — except responsibility. Big Government is a system where politicians can buy support by printing more money, and central banks wash away moral risk with low interest rates. The result is familiar: the state expands, debt expands — and the citizen shrinks. Default never comes, because the debt is repaid with weaker money. Yet someone still pays the price — the taxpayer, through inflation and the slow melting of savings.

Meanwhile, Western investors hold shockingly little gold — typically just 1–3% of portfolios. So the question remains: as the West quietly moves to devalue its debt, will every insurer, pension fund, and investor eventually need gold just to keep their balance sheet whole?

–Marko Viinikka
Founder, CEO
Voima Gold Oy

1 J.P. Morgan: USD 4,250 by end-2026. Bank of America: USD 4,000. Morgan Stanley and Deutsche Bank: USD 4,000 by 2026. UBS: USD 3,700 by mid-2026. Lombard Odier: USD 3,900 (12-month target). Goldman Sachs: USD 3,700 by end-2025 — noting that if even 1% of U.S. Treasury-linked assets shift into gold, the price could approach USD 5,000. UOB Singapore: USD 4,000 (Q3 2026). In euro terms: ≈ €102–€137 per gram.

2 Gold pays no interest, so when real rates rise, investors may shift toward yield-bearing assets. A strong U.S. dollar makes gold more expensive in other currencies and can dampen demand. In recent years, however, heavy central bank and Asian buying has made this relationship less direct than it once was.

3 www.gold.org

⁴ The weekly report published by the CFTC, which shows the number of futures positions held by different market participants – such as hedge funds, producers, and dealers. It reveals whether the market is more “long” or “short” on gold and thus serves as an indicator of investor sentiment.

⁵ See the currency table at the end of the email.

⁶ Indian households are estimated to hold around 25,000 tonnes of gold, valued at approximately €2.65 trillion

⁷ German households are estimated to hold around 9,000 tonnes of gold, valued at approximately €954 billion. Source.

⁸ If you felt a sting in your chest — or are simply curious — watch Jeffrey Gundlach’s interview at Bloomberg’s Global Credit Forum.

⁹ La Belle Époque — “the beautiful era” — was the period roughly between 1870 and 1914, when Europe experienced exceptional stability, prosperity, and cultural confidence. It was a time before world wars, before hyperinflation, before endless central bank stimulus — an era when money was gold, and gold was money.

Disclaimer: Voima Weeklies are the personal writings of the undersigned. They do not necessarily represent the official view of Voima Gold Oy or any other company, nor do they constitute investment advice or a recommendation to purchase securities.