Is it Time to Buy Gold? - Real Time Insight
February 28 2013 - 10:06AM
Zacks
After an impressive 12 year bull-run, gold has been in the
bearish territory for the past few months. Gold price has gone down
~7% in the last 13 weeks and ~5% year-to-date.
As a result of decline in investor interest, the most popular
gold ETF SPDR Gold Shares (GLD) has seen massive outflows recently,
while most of the popular US stock funds have gathered assets this
year.
Among the main reasons for decline in gold price:
· Many investors
are concerned that QE3 may end earlier than expected
· US economy and
some of the major emerging economies seem to be on the recovery
path
· Some
high-profile investors like George Soros reduced their gold
holdings
· US Dollar has
strengthened recently
· There is no
sign of inflation risk in most developed countries despite massive
monetary easing
Fed’s chief recently clarified that the Fed has no plans to end
easing anytime soon, which resulted in gold price recovering a bit.
Further, renewed worried over Europe and the impending sequester
should be positive for gold. (Have we seen the bottom in gold
ETFs?)
Also, central banks, mainly in the emerging countries have been
adding to their gold reserves. According to the latest report from
the World Gold Council, central bank purchases were up 17% in 2012
and were at their highest level since 1964.
Despite gold’s disappointing performance of late, I continue to
believe that gold should be a part (~5% to 10%) of any well
diversified portfolio. Please share your views.
SPDR-GOLD TRUST (GLD): ETF Research Reports
ISHARS-GOLD TR (IAU): ETF Research Reports
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