How Much Further Can Gold Fall? - Real Time Insight
June 26 2013 - 1:00PM
Zacks
While markets have been a little sluggish lately, trading in
commodities has been downright brutal. In particular, safe haven
commodities like gold have taken the brunt of the selling pressure,
as a strong dollar and surging bond yields have dulled the appeal
of the yellow metal.
Prices of gold are now trending near three year lows, and the
metal could set a new record for the biggest quarterly loss in its
history. Plus to top things off, there are growing concerns over
demand from key emerging market nations—like China and India—which
could further add to gold’s woes in the near term.
This trend has also led to terrible trading in gold mining
stocks as well, as these often trade as a leveraged play on gold.
Thanks to this, these have done even worse than precious metals so
far in 2013, plunging by over 50% in many cases for the trailing
six month period.
Investment
|
6 Month Performance
|
S&P 500 SPY
|
13.1%
|
Gold Bullion GLD
|
-25.7%
|
Gold Miners GDX
|
-49.6%
|
As you can see, the space certainly hasn’t been one to be in for
much of 2013, broadly underperforming stock markets for the time
period in question. Still, there is some hope for the segment going
forward, especially if volatility returns and bond losses continue
to pile up.
If investors still see red in their bond portfolios, and if the
dollar’s surge is halted, gold could be back on track in the second
half of the year. After all, GLD is still outperforming SPY from a
trailing five year look, so recent history is definitely on the
precious metal’s side (though this may not be the case much longer
at this rate).
But what do you think about the gold space right now? Does the
metal have further to fall, or is this an incredible buying
opportunity?
Let us know in the comments section below!
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MKT VEC-GOLD MI (GDX): ETF Research Reports
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