bulletNEWS

 

LATEST NEWS

BNY Mellon launches Asia Fund for Singapore team

BNY Mellon launches Asia Fund for Singapore teamStandish, part of BNY Mellon, is launching an Asian bond fund for its Singapore...
view article

Russian clouds cast shadow over upcoming ECB...

From Macro News Aug 1 2014 @ 16:17

Duffield’s Brompton hires head of multi-asset

From People Moves Aug 1 2014 @ 14:38

MORE FROM Product News

LATEST NEWS

GLG records 13% upswing in AUM in first half

GLG records 13% upswing in AUM in first halfThe discretionary fund manager raised its assets to $34.1bn (£20.1bn) in the first...
view article

AXA Wealth assets up 10%

From News Aug 1 2014 @ 11:39

Skandia to adopt Old Mutual Wealth rebrand 22...

From Product News Aug 1 2014 @ 10:42

MORE FROM News

LATEST NEWS

PA ANALYSIS: Worldwide waiting game as the Fed stalls on rate hike

PA ANALYSIS: Worldwide waiting game as the Fed stalls on rate hike Assessing the health of the global economy is a bit like watching the Commonwealth...
view article

UK firms not doing enough to ensure best...

From Regulation Jul 31 2014 @ 17:17

Argentina contagion unlikely, Fidelity says

From Macro News Jul 31 2014 @ 17:02

MORE FROM pa analysis


bulletEDITOR'S PICKS

 

Small cap focus pays off as Unicorn UK Income tops SPI white list

From Product News Jul 28 2014 @ 07:15

Managers with a large cap bias have struggled somewhat in the current environment, but investors...
view article

PA ANALYSIS: How much risk should investors seek?

From pa analysis Jul 28 2014 @ 07:02

Latest ONS figures are positive, but with global conflicts rising on the forefront how much...
view article


bulletRELATED ARTICLES

 


PA ANALYSIS: Is it 1982 all over again for gold?

From pa analysis Oct 29 2013 BY: Sarah Miloudi , News Editor , Portfolio Adviser

Add to My News Comments (0)

Add to My News Print

Add to My News

add to twitter

add to linkedin


Despite climbing by more than 10% a year since 1968, bullion has struggled to post anything other than flat returns during 2013.

With global growth on the up, it’s hardly surprising that the precious metal has had such a difficult run, but put in its historical context, gold hasn’t performed as badly in more than 30 years, leaving experts wondering whether gold is now looking incredibly cheap.

“Upside down” year

As pointed out by Adrian Ash, head of research at gold and silver exchange Bullionvault.com, the yellow metal has had an “upside down year”, offering investors little clarity about where gold's price could be heading next.

“Gold in 2013 has done almost exactly the opposite of what it typically does,” he said. “Crashing in spring, and rising sharply in summer, the gold price has reversed what veteran investors call seasonal patterns.”

Looking at bullion’s numbers, Ash clearly has a point. Normally the shine comes off the precious metal in the summer because Asian investors have just spent the quarter before stocking up, then demand normally picks up again in the autumn as India’s Diwali - the festival of lights where gold is traditionally bought around or on the day - draws closer.

Analysing the price movements over the year so far, Bullionvault’s Ash said the bulk of the time gold has done the opposite of what history would suggest, and only at two points, July and August, has gold been able to turn its flat numbers into a 19% rise.

“Only in March did gold really stick to the script, and even then it turned the average post-1968 slip of 0.2% into a nasty 2% fall,” Ash said.

"Looking at `2013, the last time gold performed anything like this badly was in 1982. From the start of that year, gold prices fell 25% by the end of June; this year gold sank 30% down by midsummer. 1982 then bucked gold’s more bearish trend with Dollar prices ending the year 8% up overall. Where the price will be at the end of this year remains to be seen, but one thing’s for certain, 2013’s topsy-turvy ride for gold isn’t over yet,” he added.

Stage set for a turnaround

However others disagree with Ash and while they acknowledge that gold (and silver) have been hard pressed at times, they believe that the precious metal’s fortunes will change.

According to the team at Golden Prospect Precious metals, a “renewed upward trend” may be seen once gold’s weak holders and speculators have been “shaken out” the market.

Portfolio manager Will Smith said he believes we have already seen the worst in terms of the gold price for this year and that the fundamental reasons for holding gold are still valid, though for gold equities, challenges around costs remain.

Speaking to investors, Malcolm Burne, chair of Golden Prospect Precious Metals, said that he, too, is upbeat on gold’s outlook, though concerns surrounding quantitative easing (QE) among other things could act as a powerful headwind.

Burne said: “Whilst all the positive arguments for gold should remain intact going forward, prices will continue to be directed by news events surrounding the current geopolitical turmoil, QE tapering by the Fed and the eurozone debt crises.

“Gold will always be an emotional subject with many bankers and investors. But without any counterparty risk that other financial instruments carry, it still remains the best insurance policy around today. When serious inflation inevitably kicks in once more the final stage of gold's long-term bull market should see gold and silver shares outperforming all other forms of investment and asset classes in quite a spectacular way.”

 

Add to My News Comments (0)

Add to My News Print

Add to My News

add to twitter

add to linkedin



COMMENTS


Have your say

(Be the first to) Have your say!

Please sign in or register here to leave a comment. Registration is free and only takes a few moments.






Share us on Twitter

SHARE US ON TWITTER
Join the community

Share on Linked In

SHARE ON LINKED IN
Inform your colleagues

Switch to our mobile site

SWITCH TO MOBILE SITE
News on the go

Back tot he top of the page

BACK TO TOP OF PAGE
Just click here...