Gold Turns Negative Year-to-Date; Stocks to Follow

Equity markets started off this year by falling. They rallied in February, working their way back into the green. The Standard & Poor’s 500 Index now is up about 1 percent for the year.

Gold has traveled the opposite path: The yellow metal began at about $1,175 an ounce. By Jan. 23, it had rallied to almost $1,300. In February, gold slipped about $60 and the fall continued this month. Gold now is down about 1.6 percent year-to-date and it wouldn’t be a surprise if the precious metal fell more this month.  “March has a history of being the worst” month for gold, according to Bloomberg. During the past four decades, on average, bullion futures decline 1 percent in March. “Prices fell 65 percent of the time, more than any other month.”

gold chart

The reason gold prices can’t seem to gain any traction are many: Job creation has been robust, inflation is low and the Federal Reserve is widely expected to begin the process of easing back on monetary accommodation — strengthening the dollar and further reducing gold’s appeal.

As we noted late last year, the gold narrative has failed. The promised hyperinflation that was supposed to send gold soaring never arrived. Instead, we had disinflation, with a threat of global deflation.

Other stories were posited by traders who were long on hope but short on cogent analysis . . .  Continues here


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  1. ch commented on Mar 10

    “Latest data from the SGE shows withdrawals in the last five days around Lunar Year (February 16, 17 and 25, 26, 27) accounted for 38 tonnes. Total SGE withdrawals in the first two months of 2015 surpassed 410 tonnes. SGE withdrawals Q1 can reach 550 tonnes or more.”

    “Gold is moving rapidly from West to East. If you don’t know this or don’t understand this, don’t worry – you will.” -Jesse

  2. dguillor commented on Mar 10

    Talk is cheap. I’ll believe that the Fed will raise rates when I see it. You would think that, for credibilities sake, they would have to, but the markets will hemorrhage, the deficit will be a bigger problem, and the dollar will get stronger. I bet that Janet is not sleeping well.

  3. intlacct commented on Mar 11

    I like gold and commodity stocks for the same reason that I like other unloved assets – it often acts counter-cyclically. Also they get relatively cheap and are highly volatile (probably cause of the gold bugs in the case of gold). Great for periodic trading and as portfolio ballast.

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