Gold Traders Most Bearish in Three Years After Drop: Commodities
Gold traders are the most bearish in three years after investors sold a record amount of metal held in exchange-traded products and prices tumbled in a bear market.
Twenty analysts surveyed by Bloomberg expect bullion to drop next week, with nine bullish and four neutral, the biggest proportion of bears since February 2010. Investors sold 174 metric tons through ETPs last month, and $17.9 billion of value was wiped out, data compiled by Bloomberg show. Hedge funds accumulated their second-biggest bet against gold on record, according to U.S. Commodity Futures Trading Commission data.
Prices had the biggest two-day drop in more than three decades last month and a majority of the 38 analysts surveyed by Bloomberg said gold’s 12-year winning streak is over. The rout highlights how some investors have lost confidence in the traditional store of value, even as central banks print an unprecedented amount of money and Europe’s debt crisis spreads.
“The fundamental picture, for now, has changed,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “The investment community or those trading paper gold in futures and ETPs are still heading for the exit.”
Gold fell 12 percent to $1,476.77 an ounce this year in London, after climbing as much as sevenfold in the previous 12 years. The metal slid into a bear market on April 12 after dropping more than 20 percent from its record closing high of $1,900.23 in September 2011. The Standard & Poor’s GSCI gauge of 24 commodities dropped 3.6 percent this year and the MSCI All- Country World Index of equities gained 8.4 percent. Treasuries returned 1 percent, a Bank of America Corp. index shows.
The demand for paper gold may have dropped, but try buying some of the real stuff, and you will pay upwards to a 5 % premium as a shortage of the real stuff exists. Want some fake paper derivative, and you can get all you want.