Gold Heading for Bear Market Plunges to Lowest Since July 2011

[Purveyor]

By Joe Richter and Nicholas Larkin - Apr 12, 2013

Gold tumbled to the lowest price since July 2011, heading for a bear market, on signs that investors are favoring the dollar and equities as the global economy recovers. Silver dropped more than 5 percent.

The dollar rose as much as 0.5 percent against the euro today, and the Standard & Poor’s 500 Index of shares reached a record yesterday. Cyprus may sell gold holdings to cover possible losses from emergency loans.

Holdings in the SPDR Gold Trust, the top exchange-traded fund backed by bullion, reached 1,181.4 metric tons yesterday, the lowest in almost three years. Through yesterday, prices slumped 6.6 percent in 2013 as global economies improved. Minutes of the Federal Reserve’s March meeting released April 10 showed several members were in favor of pulling back on its $85 billion monthly debt-buying program this year. The metal climbed for 12 straight years through 2012 partly as central banks expanded their balance sheets.

“All of the traditionally supportive reasons for buying gold don’t seem to work right now,” Frank Cholly, a senior commodity broker at RJO Futures in Chicago, said in a telephone interview. “The argument for gold as a safe haven or protection against inflation just isn’t there. We have a risk-on market, with a lot of money pouring into equities. It doesn’t look too good for gold.”

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http://www.bloomberg.com/news/2013-04-12/gold-heads-for-third-weekly-drop-on-outlook-for-reduced-stimulus.html

[onehandle]

1. Bad news for armed basement dwellers. nt

[JNelson6563]

2. Many were greedy

and got on the gold bandwagon when it was obvious to the entire planet gold was going very high. Many bought to make money, not to safe-guard assets.

I can't help but laugh at those who got in at 1500 or higher. Idiots. They did at least help inflate the value for those of us who saw trouble brewing when gold was under 400. I jumped in at that point and out at 1900. I didn't expect such an outcome but there it is. I knew it would go back down to more realistic values once the stock market got stronger.

Julie