Gold has had one huge bear run this year as can be seen from the chart alongside. There is nothing to be happy at about at all in the market for the precious metal.It co-precious metal Silver has also had a terrible journey and is down in value even more than Gold and on par to hit 2009 lows if the year plays out in the second half as it did int he first half.
What is salutory to remember though is that even in 2008/9 Gold was not even close to $1000 an ounce, even all of the boom in everything led by leverage had not bumped up Gold so high. It's low in 2002, the famous Brown Bottom, was indeed $225 and so the eventual price of nearly $2,000 was nearly a 10x return in the space of a decade.
However, the technicals for Gold look bad at the moment. Gold has no yield and in the current market of zero rates this is really starting to impact on holders. Add to that buyers are then looking for capital appreciation and a store of wealth, then you can see how the price falls can easily turn into a rout if Gold instead of proving durable, starts to lose money.
Also of interest is that many of the new gold mines have costs of production of over $1000 an ounce. New supply is not going to be rushed into the market and this may well stabilise the price in the medium term. In the short-term gold will test $1,150 according to trend analysts and if it fails this we could see gold below $1,000 an ounce for at least a little bit of the year.
Shame a chunk of my pension is in Gold shares, they have had a dredful year! Oh well, can't seem to pick anything right this year, much as last....
We sold much of our gold (and silver) ETFs a couple of months ago to let us clear our mortgage. Oh happy fluke!
ReplyDeleteWe're keeping the rest as insurance versus fiat currency horrors.
That's the thing with buying assets that have no useful purpose/yield, sometimes you get the capital loss without having anything/income to enjoy ;-)
ReplyDeletePeople are mining gold at a *cost* of $1000 an ounce? Which fools invested in *that*? May I coin the term Gold Mugs?
thankfully my apathy in doing something with metals, has at least only resulted in a loss of inflation eating into my capital... happy with that, was so close to buying in December '12. Off to look at what else not to buy to continue my slow erosion of cash.
ReplyDeletenice of everyone to abstain from reminding me of the lousy timing of my silver long ...
ReplyDeletewhat a considerate lot you are
So people are getting out of sovereigns, out of shares (well commodity shares), out of gold. Yet money is still being QE'd slightly. Doesn't this mean the money supply is contracting, at least more than the QE? If not where is the money going?
ReplyDelete"a dredful year!"
ReplyDeleteA dreadful year for spelling as well.
But in the longer term the US, Europe and UK either have to repudiate a huge number of future promises (state pensions etc) or let inflation rip. Cash (which I've been in since 2008 - fool that I am) is not really a good holding in anything but the short term. I've probably seen a year's worth of earnings eaten by inflation in that time.
ReplyDeleteEnergy and food? Land and Property?
@ND
ReplyDeleteI nearly asked :) But thought if you had got out in time, you would have (proudly) told us.
""" Gold has had one huge bear run this year as can be seen from the chart alongside. There is nothing to be happy at about at all in the market for the precious metal.""" this is right and very interesting to us to know so thaks so much for this great and very interesting post ....
ReplyDeleteinteresting to read and understand """ the technicals for Gold look bad at the moment. Gold has no yield and in the current market of zero rates this is really starting to impact on holders. Add to that buyers are then looking for capital appreciation and a store of wealth, then you can see how the price falls can easily turn into a rout if Gold instead of proving durable, starts to lose money.
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