Breakout Writes: Here’s why gold’s drop isn’t done yet
Alas some investors in the old yellow metal might consider the dog’s fate a decent alternative to what’s happened to their portfolios of late. After more than a decade of doing nothing but move higher annually, physical gold and the SPDR Gold Shares ETF (GLD) got destroyed in 2013. For good measure the Market Vectors Gold Miner ETF (GDX) () got even more walloped, and has lost more than half its value over the last 52-weeks.
“Real interest rates are going up, the U.S. economy is improving, we’re in an environment where a return to normalcy is the course of the day. None of this is supportive of gold.”
Doll has some closing advice for gold investors: “If somebody has gold in a tiny little corner of their portfolio for insurance purposes, my hope for them is that gold doesn’t do well because everything else in their portfolio probably is going to do well. It’s a hedge. It’s insurance. Have a tiny corner, at most.”
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I am not a Gold expert. I would be the first to admit that. Here my previous view on GOLD. However, given an overwhelmingly negative sentiment on the subject matter, it might be time to take another look.
Once again, fundamentally speaking there are too many variables for me to properly analyze gold. Also, while the technical picture remains bearish and weak, there are some signs of the bottom forming. More importantly, as the article above indicates, overwhelmingly negative sentiment on gold might lead to a good trading opportunity for those who would like to explore it further. Here is why….
The majority view on the overall economy, the stock market and inflation/deflation is fundamentally wrong. The reason the Gold is down so much might not have anything to do with the metal itself and everything to do with speculative bubble forming in all other asset classes. With everyone chasing performance in the stock market, gold is no longer viewed as a hedge against uncertainty. Of course, precisely at the wrong time. Should the bear market start in 2014 (as I have indicated), Gold should once again become “the hedge” against troubled market. When it does, the price is likely to appreciate significantly.
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The Secret Behind Gold’s Decline