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Report: Investing in gold is no longer a 'safe haven'


April 21, 2013 08:30 PM



After 10 years of rising ... Prices experienced the largest decline since the eighties of the last century

When he started David Gornol, is a 21-year-old precious metals trading in the year 1981, it was the weekend nothing to fear so much. Number of only a few brave, according to remembers Gornol, were willing to trading on Friday afternoon, as prices were vulnerable to collapse by Monday.

Last week brought some memories, as gold fell on Monday 8.5 percent, the biggest drop since 1983, when the market was dying, and the daily price fluctuations by 10 percent or more were common.

According to (Rai), the newspaper «Financial Times» About Gornol, who serves as chairman of the London market for the alloy and is now one of the largest dealers of gold in the world: «It looked like we moved back to those old days».

The collapse sent the price of gold wave of warnings over the investment world. After 10 years of rising prices, gold investment is no longer 'haven' for a small number of specialists and collectors, but the fundamental interest of investors, pension funds and university endowments to savers and pensioners from Salt Lake City to Shanghai.

But optimism regarding the high prices steadily evaporated last week, as gold fell $ 243 since Friday morning to Monday night - the biggest move ever in terms of dollar value, and the third largest move in percentage terms.

Bankers say their phones have not stopped ringing panic calls from wealthy clients were persuaded to transfer 2 to 10 percent of their wealth into gold.

Founder says Chief Investment Officer at the Foundation «Citrine Capital Management, a hedge fund invests in Crohn Paul metals:« we have seen move in full in 48 hours. There are a lot of people in a state of shock.

And emphasizes the Financial Times that gold investors may be in a state of shock, but they can not claim that he did not warn them. The enjoyment of these excellent rates run over ten years, as mobilized prices more than 600 percent down to a peak of $ 1,920 an ounce in September 2011, when fear swept through the financial system and make a larger number of investors looking for a haven in the yellow metal.

But for every new high price there were voices condemn and criticize irrational gold as an investment, as George Soros described as «the final asset bubble - although it continues to invest in it until late last year, when he sold almost all his possession. As Warren Buffett mocked of gold investors, who cast him from the ground only for «bury him again, and pay people to stand around guarding him.

At the level of less ideological, gold traders seemed less enthusiastic after Mario Draghi vowed that the ECB does «whatever it takes to save the euro in July. Since then, the euro has recovered and stock markets rose and investors draws attention away from gold.

Troy says Gaski, director of the conservative group in financial Sky Bridge, a group that invests in hedge funds: «investors began to ask the following question: Why do we have this thing again?

And describes the Financial Times that the market is taxed also factors more attached to gold, as Indian buying of gold fell sharply in the year 2012 with a slowing economy in the country and the government raised taxes on imports in an attempt to reduce the current account deficit. Chinese demand also fell, after surging in the previous year, to a large extent last year amid weak economic growth.

The paper considers that the disappointing demand for the two countries together represent about 40 percent of global gold consumption means that the purchase by Western investors have become more important to support the price of gold. But the procurement process that did not occur, as it began the process of exchange-traded funds, which established a decade ago and helped to promote investment in gold, in unloading their belongings. In the first three months of this year, fund sales hit a record 182 tonnes - equivalent to the annual output of South Africa.

The paper points out that the extent of investors away from «falling in love with gold» became clear last month, when he threatened to bailout Cyprus plunge the euro zone into crisis again, indicating that «rings similar» led to the rise in gold prices to new highs, but this time barely affected the market, up by less than 2 percent.

He added that Cyprus when it agreed last week to sell gold to help finance the rescue plan, turned this approval 'slice soft' to unrest in the market.

Says head of precious metals at the Bank «Barclays» Jonathan Sybal that such approval was «turning point» in the gold market, in what is considered Bank «Goldman Sachs» that the sale of gold by Cyprus could be the beginning «liquefaction biggest gold reserves by central banks other European, recommending bet on the decline in the price of gold.

This is what I've done some hedge funds, which sparked a series of selling gold which drove prices onset of the first fall to the lowest level in 10 months and then to its lowest level in two years.

In this regard, says the head of precious metals at a large bank deals in gold: «surprised about it and we could not do anything about it. No one expected this happens. But gold casts strong. It will take more than a low price last week to convince the more ardent supporters of gold to sell.

And like a managing director at «Precious Metal Insight» consulting firm specializing in precious metals, Hong Kong-based Philip Clapfik, «Insects» Gold most enthusiastic b «Albeturnders» They are a small group of fighters of the war «Boers» who continued to fight even after it became clear that they lost the war. He Clapfik: «If you look at the recent decline in the market, the true believers took a very long time to start selling - or they had to death and then their children will sell their gold.

The paper draws out that the main «Albeturnders» today is John Paulson, the billionaire hedge fund manager who became famous by betting against the U.S. housing market before the financial crisis.

In 2009, Mr. Paulson decided to transfer a large part of its assets to gold rather than the dollar, making it one of the largest owners of bullion in the world. And stresses that such a move by the U.S. Federal Reserve and other central banks to engage in quantitative easing, or 'printing money', will eventually lead to runaway inflation and debasing the value of paper currencies such as the dollar. He left the collapse of the price of gold last week, Paulson is unaffected.

He says partner and analyst Gold strategist at the company «Paulson & Co.» John Reid: «working federal governments to print money at an unprecedented rate, increasing the demand for gold as a currency alternative, while it can be gold volatile in the short term, and is currently undergoing in one of the amendments rotating, and we believe that the long-term trend of increased demand for gold instead of paper is sound.


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Expert. . Shortage of supply and the resumption of the procurement funds to pay gold for stability
April 21, 2013 10:32 PM Last Updated: 21 Apr 2013 10:32
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Said Chief Executive Officer of (alloy Kuwait) to trade precious metals Recep Hamid said that the price of gold stabilized at the level of 1400 U.S. dollars per ounce due to lack of supply and the resumption of investment funds for acquisitions at the end of last week.

He added that the stability of prices around the $ 1400 level during the next week, "means that there is a general trend to higher demand and thus the rise of an ounce of gold again around 1500 dollars."

He noted that the forecast says that the current price stability could be just a correction due to the succession of landings during the past few weeks "and profit-taking operations would be the biggest contributor to the decline in price if ratified those expectations."

He Hamid said there مخاوفا, among investors that the price of gold up to $ 1,300 per ounce "and this a possibility by 30 percent, according to statistics currently trading Wi negative news about the dollar or U.S. markets will support this trend."

He explained that the main reason for any rise of gold in the foreseeable future will be conditional on the price pressure from before the actual purchase operations carried out by the gold traders and gold jewelery factories around the world, "and this is the main supporter of prices now."

Meanwhile, the World Gold Council said in a statement posted on its website that the main reason for the descent of prices sharply last week, is the behavior of speculators in the futures markets "Venzerthm short-term profit-taking quick contradict with the long-term outlook for real investors."

He said in a statement to KUNA that the Council that it "appeared clearly through buying spree massive gold, which was launched over the weekend and has accelerated in the wake of landing additional prices on Monday and traders see it an opportunity to buy gold prices not seen in the past two years."

The World Gold Council affirmed that it is closely following reactions markets witnessed a shortage of bullion and coins to the order, which indicates that buyers are willing to pay higher prices than the spot price for the precious metal after the sudden drop in prices.

And monitor the Council's more than one reason for the collapse of the price of gold which the banks sell one tally of 125 tons and the prospect of Cyprus to sell her gold, which hit the largest investment banks panic and try to get rid which has a yellow metal with succession descent prices.


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