The 30-member Philadelphia Stock Exchange Gold and Silver Index, including Freeport-McMoRan Copper & Gold Inc., fell 20 percent this year, extending retreats of 8.3 percent in 2012 and 20 percent in 2011. Mining companies have so far held off locking in prices by selling future production, with Barclays anticipating net hedging of 20 tons this year and 35 tons in 2014. Annual production is about 2,700 tons.
Options traders are increasing bets on more declines. Puts that profit should the SPDR Gold Trust fall 10 percent cost 2 points more than calls betting on a 10 percent rally, according to three-month options data compiled by Bloomberg. The price relationship known as skew reached a record 3.3 points Feb. 21. Combined ETP holdings stand at 2,479.9 tons, from a peak of 2,632.5 tons in December.
Hedge funds are 84 percent less bullish on gold than they were the month before prices reached a record in September 2011. Speculators held a net-long position of 39,631 futures and options in the week ended March 5, the fewest since July 2007, U.S. Commodity Futures Trading Commission data show.
The U.S. Mint sold 753,000 ounces of American Eagle gold coins last year, 25 percent less than in 2011, data on its website show. Coin and bar sales from Australia’s Perth Mint fell 17 percent last year, the company said March 6.
“People are seeing less need for gold,” said Michael Mullaney, the chief investment officer at Fiduciary Trust in Boston, which manages $9.5 billion of assets. “The end of loose money supply is making gold less attractive.”