The results from our gold poll are in and they are somewhat surprising:
A vast plurality believed that gold would remain rangebound through the end of the year. Meanwhile, barely 1 in 4 poll respondents believed that there would be a bullish end to 2013 for gold.
Given that the majority of CEO.CA readers are likely to hold a favorable view of precious metals, I find the poll results to be indicative of deeply depressed gold market sentiment. In addition, we have gold bloggers who have given up blogging about gold and where the bottom might be.
Some bloggers have even shifted to the bearish camp with articles such as “Gold Headed for $1,000 as Investor Liquidation Resumes”.
We also came across the following article about Canadian hedge fund manager Eric Sprott’s recent dismal performance:
“One of the Most Famous Gold Bug Fund Managers has Gotten Obliterated” -- if an 85% decline in Mr. Sprott’s assets under management is any indication, investors have completely thrown in the towel on the precious metals sector.
From our vantage point gold has been hit with an incredible confluence of bearish macro news during the past few months – a quick run down:
- Global economic data has steadily improved throughout 2013
- Yields have been in a steady uptrend since April and gold bulls can no longer cite negative real interest rates in their bull thesis
- Inflation remains conspicuously absent – if anything, disinflation is prevalent
- The Federal Reserve’s “taper” has begun
- Investor perception of ‘tail risks’ has dropped drastically throughout 2013
- The high gold demand BRIC countries (Brazil, Russia, India, China) continue to wrestle with economic slowdowns and uncomfortably high levels of consumer price inflation
Gold has become a losing trade to many recent investors who are now caught gazing starry eyed to the recent performance of the US stock market. It won’t be any coincidence when gold bottoms within a few weeks of a major top in US equities.