Gold With Silver Heading for Worst Year Since ’81 on Asset Sales
By Phoebe Sedgman Dec 31, 2013 4:15 AM ET
Gold headed for the biggest slump in three decades and the first annual loss since 2000 as an improving economy cut demand for wealth protection. Silver was poised for the worst annual performance since 1981.
Bullion fell 28 percent this year to $1,199.73 an ounce by 8:34 a.m. in London. Investors lost faith in the metal as a store of value as equities rallied and an economic recovery prompted the Federal Reserve to pare its $85 billion in monthly bond purchases. Silver dropped 36 percent to $19.4641 an ounce.
Assets in exchange-traded products backed by gold fell 33 percent to the lowest since 2009 amid sales by billionaires George Soros and John Paulson. Disposals of 864.8 metric tons in 2013 were more than the combined inflows in the prior three years, data compiled by Bloomberg show. The Standard & Poor’s 500 Index of shares climbed 29 percent and is set for its best year since 1997, while the International Monetary Fund signaled this month the U.S. economy will expand more than forecast.
While ETP investors “had previously been a source of demand for gold, they became net sellers,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “Investors gave up at least temporarily on the notion that central-bank stimulation was going to cause an inflationary problem in western economies in the foreseeable future.”
Silver is the second-worst performer in the S&P GSCI Spot Index of 24 commodities, which declined 1.8 percent. The MSCI All-Country World index of equities climbed 20 percent, while the dollar rose 3.5 percent against a 10-currency basket. The Bloomberg Treasury Bond Index fell 3.2 percent.
Paulson, Soros
Paulson, the largest holder in the SPDR Gold Trust, the biggest ETP, said Nov. 20 he personally wouldn’t invest more money in his gold fund because it’s unclear when inflation would accelerate. Soros and Third Point LLC’s Daniel Loeb sold their entire stakes in the fund in the second quarter.
Gold assets are at 1,764.1 tons, dropping in 2013 after expanding every year since the first product was listed in 2003. About $73.7 billion was erased from the value of holdings as prices sank, data compiled by Bloomberg show. The SPDR Gold Trust fell 41 percent this year to 798.22 tons, the lowest since 2009, according to data on the fund’s website.
A further 311 tons will be withdrawn from gold-backed ETPs next year, according to the median of 11 analyst estimates compiled by Bloomberg. Holdings in ETPs backed by silver advanced 2.4 percent this year to 19,377.5 tons, according to data compiled by Bloomberg. Palladium assets climbed 15 percent, while platinum holdings surged 71 percent, data show.
more:
http://www.bloomberg.com/news/2013-12-31/gold-with-silver-heading-for-worst-decline-in-three-decades.html
DO SOMETHING!
| 