Image Source: Wikimedia Commons BY BRIAN BONDUS Gold dropped more than 6 percent Monday, racking
up its worst two-day loss in 30 years. Analysts speculated on what caused the dramatic drop.
“You’ve got this sort of perfect storm, guys. Where you have the China slowdown
on top of this Cyprus issue which is really putting pressure on the gold stock and these
other commodities.” (Via CNBC)
Cyprus just announced plans to sell 40 tons of gold. This “Perfect Storm” is so rare,
a Fox Analyst had to reach into his memory bank to recall a similar industry drop.
“Long time since I’ve seen any significant market dump 8 percent or 10 percent in a single
day. Individual stocks, yes, but an entire gold market? I’ve not seen that for a long,
long time.” An ounce of gold currently costs about $1,390.
It was up to as high as $1,560 in the middle of March.
Goldman Sachs cut its end-of-the-year prediction for gold last week by $150 and advised clients
to not only sell gold, but short it as well. (Via The Wall Street Journal)
“Where is the growth? Where is the great story that’s going to drive the demand for
commodities? Maybe it’s Brazil, maybe it’s India, but there really isn’t enough there
to spur the demand you need to really move prices higher from here. ” (Via ABC News)
A writer for CBS says the time for gold is running out, calling it a lousy investment
compared to stock in a company. “It doesn’t produce anything. Companies
produce things that people need and enhance their lives. They produce profits and owning
stocks owns that wonderful global capitalism. My gold has barely kept up with inflation,
meaning that it returned nothing it real terms.” But one economist notes an investment in gold
10 years ago could have already yielded more than 400 percent return, and the current monetary
policy makes gold a long-term winner. It’s just simple supply and demand 101.
“This is a far less complicated issue than many economists will have you believe. It
has to do with the amount of money in the supply versus the finite, unchangeable amount
of gold available worldwide.” (Via Seeking Alpha)
Other metals including silver, platinum and copper were all hit hard by the heavy selling