Investing in gold can be quite a black-and-white proposition: If you’re scared about the future (particularly inflation), you can load up on the stuff; but if you see value elsewhere in the investable market, it’s not so alluring.
The price of gold is down nearly 2% today, and has even dipped below $1,600 an ounce. The precious metal is down roughly 4% this year, and has fallen 6% since the end of November. Clearly there’s a slide going on:
Notable institutional investors, including George Soros, Julian Robertson and�Allianz’s�PIMCO reduced their bets on gold during the [fourth] quarter, when bullion posted its biggest quarterly loss in more than four years.
As Brendan Conway writes today, the sight of big name managers dumping gold augurs badly for its near-term prospects.
Of course, as gold has been slipping, stocks have been rising: the Standard & Poor’s 500 index is up 6.8% this year and 12.5% in the past three months. Even as the�SPDR Gold Trust (GLD) has seen $1.5 billion of net outflows — the second largest withdrawals of any ETF — stock funds have been seeing hearty inflows.
In the period following the 2008 market collapse, we heard seemingly non-stop that gold was the place any sane investor would be — especially if it meant sitting out the stock market. The past few months suggest — in �performance, fund flows and big-manager moves — that perhaps finally (and more quietly) we’re seeing that process reverse itself.
Update: Front Month Comex Gold for February delivery lost 3.43% this week to finish at $1,608.80 an ounce. That’s the lowest settlement price in 2013, according to WSJ’s Markets Data Group; gold is now 10.3% off its 52-week high of $1,794.10, hit on Oct. 4.
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