Goldman Bearish
Goldman Sachs Group Inc. said April 10 that the turn in the gold cycle was quickening and that investors should sell the metal. The selloff that began last week was sparked by mounting concern that Cyprus would be forced to sell gold from its reserves, “potentially reflecting a larger monetization of gold reserves across other European central banks,” the bank said in a report today.
“Gold is no longer a safe-haven asset,” Brian Jacobsen, the chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said on Bloomberg Television’s “First Up” with Susan Li. “We could actually maybe see a long-term trend of gold trending towards $1,000 in order for it to better converge with other commodity prices.”
ETP Holdings
Holdings in the SPDR Gold Trust, the biggest exchange- traded product backed by bullion, fell to 1,154.34 metric tons yesterday, the lowest since April 28, 2010, data on its website showed. Global ETP holdings are down 9.5 percent this year, compared with gains for products linked to silver, platinum and palladium, data compiled by Bloomberg show.
Billionaire investor George Soros, who called bullion the “ultimate asset bubble” in 2010, cut his stake in the SPDR gold fund by 55 percent in the fourth quarter, while hedge-fund manager John Paulson kept his holding. Warren Buffett, the third-richest person in the Bloomberg Billionaires Index, said last year in his annual letter to shareholders that investors should avoid gold as its uses are limited and it doesn’t have the potential of farmland or companies to produce new wealth.
Gold reached a record $1,923.70 in September 2011 and climbed for a 12th year in 2012 as nations pledged more stimulus to bolster economic growth. Prices fell 19 percent this year through yesterday.
“People may be starting to get a little nervous about whether gold is continuing its run over the last decade or so, where it’s always increased in price on an annual basis,” said Alexandra Knight, a Melbourne-based economist at National Australia Bank Ltd. “They may be getting to the stage where they realize it’s not an ever-increasing asset.”
Silver futures for May delivery jumped 0.4 percent to $23.455 ounce on the Comex. Earlier, prices touched $22, the lowest since Oct. 5, 2010. Yesterday, the precious metal retreated 11 percent, the biggest drop since Sept. 23, 2011.