“Most of the ‘weak hands’ are already out of the market,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “We may see inflows with price stabilization expected from the second quarter of 2014.”
Mine output may also drop. The world’s biggest producers including Toronto-based Barrick Gold Corp. took at least $26 billion of writedowns, cut spending and fired workers as prices fell and costs rose. UBS estimates miners spend about $1,200 to produce every ounce.
Paulson, the hedge-fund manager who said last year gold was his best long-term bet, told clients last month that he personally wouldn’t invest more money in his gold fund because it’s not clear when inflation will accelerate, according to a person familiar with the matter.
While Paulson & Co. sold half its stake in the SPDR Gold Trust in the second quarter, the investor remains the largest holder, with 10.23 million shares as of Sept. 30, a Securities and Exchange Commission filing shows.
‘Ultimate Bubble’
Soros, who called gold the “ultimate bubble” in 2010, increased his stake in the SPDR Gold Trust over five quarters starting from the three months through the end of September 2011. His company then lowered holdings in the two quarters through March, before selling the remainder in the three months to June, SEC filings show.
“Gold ETFs have fallen out of favor in 2013,” said Mike McGlone, the New York-based director of research at ETF Securities, citing the economic expansion, rising equity markets and prospects for tapering by the Fed. “We view 2013 as a correction in the longer-term structural gold bull market.”