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Will Investors return to Gold soon?


Category: ETFs


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Will Investors return to Gold soon?

 

June 27, 2013/ The Analyst 






Take your minds back to 2008. You'll recall that

  • *the financial world was in total dismay
  • * Collapse of major investment banks
  • *collapse of stock prices
  • *Housing Price Change
  • *unemployment was inching higher
  • *business sentiments were low
  • *investments were faltering.  

During the global financial crisis, gold is seen as a safe-haven investment. It does live up to its expectation as it outperformed U.S. Treasuries and the Swiss franc but the precious metal has been seeing red since the beginning of the current year.
 

It does continue to record sharp and further losses since Federal Reserve Chairman Ben Bernanke said last week that policy makers will end their stimulus program when the economy gains full strength, with the consensus of central-bank watchers saying that could be as early as a year from now. 

The metal which has closed green in the last nine (9) years recorded +23.4%, +27.1% and +10.1% gains in the last three years after the 2008 bubble has so far recorded -26.6% YTD loss in 2013. 

 

Also, the performance of ETF Gold on the Nigerian bourse has been negative as it has so far recorded -23.60% YTD losses in 2013 while its performance in previous years has not been impressive as well. 

 

Some commodity investors are of the view that gold will record more losses while others believe it may once again represent one of the biggest buying opportunities once prices bottom in the months ahead. When there's such a disparity in the investment community, it's important to take a step back and look at the fundamentals and longer-term trends to put the most recent gold moves in context. 

Gold right now is experiencing nothing but a result of gross misconception that the global economy is on the mend and problems facing the global economy and US economy in particular have hardly been solved. Long term fundamentals remain as weak as they were few years ago and there seems to be no solution in sight. 

The trend for gold is undeniably bearish. The yellow metal will remain in this bear market until it regains its fundamental value as a safe haven and inflation hedge. 

Thus, while gold seems to be out of favour with most investors right now and could even go down from here as most asset classes in correction mode do, the long term trend of higher gold prices seems pretty much intact. Therefore investors would do well to start stocking up on the yellow metal if they haven't already.

 

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4.Newgold Gold Bullion Debenture Holders adopt a new Memorandum of Incorporation

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6.New Gold ETF records -4.58% YTD, has room to turn green

7.Should Investors add Gold to their Portfolios?

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