After plummeting last year in an extreme once-in-a-lifetime orgy of selling, GLD’s holdings have remained stable all throughout 2014.
That’s despite the fierce headwinds of the levitating stock markets continuing to howl, and the recent gold sentiment wasteland of the summer doldrums. GLD holdings' resiliency is very bullish.
As these lofty stock markets inevitably sell off, stock traders will return to GLD. Their necessary GLD-share buying to re-diversify unbalanced stock portfolios will add big marginal gold investment demand.
Gold prices (GLD -3.5%) are supposedly tied to inflation, but Eddy Elfenbein believes gold's value should be based on interest rates. He finds gold acts like a leveraged short position on short-term real rates, with a break-even point at 2%. David Merkel's variation on the model projects gold reaching $3,000 in mid-2013 if the Fed stays true to its word to keep rates low.
Precious metals accelerate their slide alongside the drop in equity markets and the euro. Gold is down 4.5% to $1,589/oz., the lowest price since September. Silver, off 8%, drops below $29/oz. On the industrial side, copper -4.8% to $3.27/lb., still well above the $3 level hit in October.
Precious metals are down sharply again this morning, led by silver, off 6.9% to $29.10, and within sight of its yearly low set in January of about $27/oz. Off 2.9% to $1,614, gold is at a 2 month low. Chatter abounds of hedge fund (Paulson) liquidations and central bank shenanigans, but gold has had a nice decade run - can't it just sell off once in awhile?
The selloff in gold accelerates after the Fed delivers no new candy in its policy statement, the metal falling nearly 2% since 2:15. At $1,638/oz., gold is at its lowest level since mid-October, when it briefly dipped below $1,600. GLD -2.3%.
Dennis Gartman fires up another prediction for gold, saying this time that the bear market is here after an 11-year run of higher prices. He finds the progression of lower highs and the "confirmation" that the new interim low is below the previous low is all the evidence he needs to see. "We have the beginnings of a real bear market, and the death of a bull."
Gold suffers its worst selloff in 2 months, down 3.1% to $1,665/ounce as risk is very much off this morning. We forget, is gold supposed to rise or fall when financial markets turn south? On the industrial side, copper slides as well, -3.2% to $3.44/pound.
Gold has tumbled ~6% over the past three months, amid macro conditions that would seem bullish for the metal. But Bespoke advocates a longer-term perspective; gold is still up ~20% YTD, exceeding its five-year and 30-year average annual returns. "Relative to just about any other asset class this year, gold is still glistening."
Gold is tumbling, reversing its recent perkiness on disappointment the ECB isn't about to unload a wave of freshly printed euros over the continent. The metal dives $40 to $1,725/oz. since Mario Draghi's press conference started. GLD -1.4% premarket.
Graham Tuckwell, who created the first ETFs for gold and oil, is looking to sell his company, ETF Securities, for a potential price of £1B ($1.6B), the FT reports. Tuckwell's decision comes as money pours into gold ETFs and scrutiny increases on the market for the funds.
Gold moves to new highs on the week and looks set for another assault on $1,800/oz. as the monetary spigots are opening again, all around the world. A partial list from the last 72 hours: China RRR cut, Fed dollar swap line cut, Brazil rate cut, ECB shenanigans. The metal currently sits at $1,760, +1.1% for the day.
Commodities and their ETFs are romping, boosted by China's move towards easing and news more dollars are soon to be sloshing around the world. GLD +1.6% (the metal itself is up 2.1%), WTI crude USO +1.7%, Copper JJC +4%.
Given an expected slowdown in global growth, Morgan Stanley says it's a good time to be long on commodities, but not "indiscriminately." Gold, silver and livestock should all perform well in the coming year, while base metals and crude oil are the least preferred.
Jim Rogers thinks the price of gold is set for a correction which will give investors a strategic entry point. "I'd probably get more interested at $1,600. At $1,710 or whatever it is today I'm not buying gold, I'm just watching."
The Bundesbank sells 150K ounces of gold in October, lowering its stash to 109.19M ounces. "There is no reason to start speculating about the future of German gold reserves," says a Buba spokesman, as the sale was to the Ministry of Finance for the purpose of minting commemorative coins. Whatever the reason, the bank now holds less metal, more paper.
Gold stocks are weak today on softness in the yellow metal futures, as a failed German bond auction sends investors scrambling for the safety of cash and U.S. bonds: Randgold (GOLD -3%), Barrick Gold (ABX -1.8%), NovaGold (NG -3.5%), Kinross (KGC -1.2%).