The demise of gold in the last few months has been well documented as investors watched the metal tumble from $1,900/oz to below $1,400/oz in less than two years, a drop of 25%. But it was not that long ago that analysts and investors were not only touting gold as a good investment, but gold miners were seen as a great opportunity for those looking for an equity spin on the metal. Unfortunately, that idea has not panned out, as the past few years have hit the gold mining sector especially hard [for more gold news and analysis subscribe to our free newsletter].
Last week, we reported on Goldman Sachs (GS) slashing its outlook for gold and suggesting investors short the precious metal. In a letter to its clients, analysts at the company stated “We see risk to current prices as skewed to the downside as we move through 2013. In fact, should our expectation for lower gold prices continue to prove correct, the fall in prices could end up being faster and larger than our forecast.” But given Goldman’s history, it will be difficult for many to trust this sentiment [for more gold news and analysis subscribe to our free newsletter].
While major U.S. equity indexes continue to push into uncharted territory, commodities have taken a backseat so far this year. As investors keep pouring into stocks and increasing their overall risk appetites, safe-haven assets like gold have faltered. Year-to-date gold has dipped just over 7%, while the S&P 500 has jumped over 11% during the same time period [for more gold news and analysis subscribe to our free newsletter].
For years, investors and analysts have heavily criticized the actions of Federal Reserve Chairman Ben Bernanke. Bernanke has earned himself a slew of nicknames for his money printing, with the most popular being “Helicopter Ben.” After studying the Great Depression for many years, Bernanke felt that the reason the U.S. slipped into such a rough patch was because of the lack of money supply in the economy. This is one of the main reasons that he has maintained his quantitative easing programs that have involved exorbitant money printing.
It was Warren Buffett that urged investors to be greedy when others are fearful, and fearful when others are greedy. At a time when it seems like equities are unstoppable, investors have been pouring into stocks and increasing their overall risk appetite. As a result, safe-haven assets like gold have taken a big hit, as there is less perceived risk in the economy than in the recent past. But what goes up must come down, and savvy investors have an opportunity to turn a profit based on current trends [for more gold news and analysis subscribe to our free newsletter].
When it comes to commodities, most investors turn to the likes of Jim Rogers and George Soros, legendary gurus that have long held the spotlight in this asset class. And while their contributions to the commodities world have certainly helped shape the market we know today, there is one group of individuals that is often overlooked, though they have continually played a major role in the natural resources market: professors [sign up for our free commodity newsletter here].
Contango is a natural phenomenon in the world of commodity futures. Some view it as an evil that plagues the space, but in reality it is just another pattern that traders can profit from. Contango, simply put, is the process by which futures contracts get more expensive as the maturity dates get further out from spot. While this can hurt a long-term position, savvy traders can use this uphill curve to their advantage. Below, we outline several commodities exhibiting contango to help you make the best trading decisions for your portfolio [for more commodity news and analysis subscribe to our free newsletter].
Gold prices have been struggling over the past coupe of months as equities have picked up steam and set their sights on historic highs. As such, many investors have moved out of gold and into equities, looking to cash in on the currently bull market. This trend can be easily demonstrated by the SPDR Gold Trust (GLD), which holds physical gold bullion. The fund has lost more than $4.7 billion in assets in 2013, though it still remains the second largest ETF in the world [for more gold news and analysis subscribe to our free newsletter].
In Ben Bernanke’s testimony on the Semiannual Monetary Policy Report before the Senate Banking Committee this week, the Fed Chairman signaled that the central bank would continue its stimulus policies, citing that the economic landscape still possesses several red flags. And while this may have quelled fears that the Fed would wind down or scale back its massive bond-buying program earlier-than-expected, investors still remain on edge [For more commodity news and analysis subscribe to our free newsletter].
Gold and silver have always been subject to claims that major institutions have been manipulating prices. In some cases, such price manipulation has even been proven, opening the door for further suspicion from investors around the world. It seems that as the years go on, more and more investors hop on board with these theories, with Eric Sprott, CEO of Sprott Asset Management, being one of the latest heavy-hitters to weigh in [for more precious metals news and analysis subscribe to our free newsletter].