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....
