Is it worth to invest in gold?
John Paulson, a well-known fact that in 2007 year earned $15 billion on the controversial game against low-quality mortgage securities, for a long time held the title as the largest shareholder of Gold Index Fund SPDR Gold Trust.
However, during the second quarter of this year, he unexpectedly slashed its position twice. This event attracted a lot of attention, because Paulson after the crisis year 2008 was one of the most famous advocates of "gold" investment, always appealing to "bubble paper money FED razduvaemomu.
Paulson was not the only one, who put his hand to the 23% drop in gold in the second quarter. George Soros also poured more fuel on the fire by getting rid of all the shares of SPDR Gold Trust and finally eliminating the position. For investors in gold came on hard times. According to the information of the World Gold Council, in the second quarter, demand for gold fell to four-year lows, gold and the cost of funds index fell to $44.7 billion.
SPDR Gold Trust's assets declined in the year 2013 the third, dropping to the level of the beginning of year 2009. However, in the third quarter gold price played a part of fall, exceeding $1400 per ounce. Should we expect further growth and to participate in the rally? Despite the temptation, with purchases of gold with speculative purposes it is better to abstain. It looks like the situation 30 years ago. The previous wave of price rises occurred in the 1970 's, quickly changed the long-term bearish trend, after the Fed Chairman Paul Volcker has increased the discount rate up to 20% and prices fell from $850 to $300 per ounce.
This time the culprit tragedy became Ben Bernanke. One hint of the printing press and slow growth rate originally projected 2016 year was enough for the gold market collapse. Falling prices in may coincided with the rapid growth of the United States Treasury bond returns. This is not surprising. Despite the widespread view that gold is an asset to fight rising prices has nothing to do with inflation.
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Gold price depends primarily on two important parameters: the real interest rate and the growth rate of the money supply. Oh and the so-called Award for Armageddon: the rise of global geopolitical or structural risks often causes a short-term jump in prices. The interest rate is a key indicator of future price movements. Gold price demonstrates stable reverse dependence on real rates. In the past five years, thanks to the aggressive programs of direct monetary stimulus real interest rates in the United States remained negative.
Investing in gold have become suddenly attractive, although not brought any interest or income dividendnogo. Under normal circumstances, an investor would have so-called opportunity cost, that is lost would be the hypothetical income from investments in alternative low-risk instruments. But so far ruled negative real rates, investor, on the contrary, the FED doplachival for the opportunity to invest in government securities. It is no wonder that the popularity of investment in gold has gained an unprecedented scale.
However, in the spring of the painting has undergone considerable changes. If at the beginning of the year the market was expecting that the rates increase will happen at the end of the year 2016, after the first applications start reviving expectations Bernanke 2015 year. Bond yields rose, real rates have ceased to be negative. Of course, the United States economy is unlikely to start the cycle the FED raising rates in the year 2015, and over time, the expectations of the market will return to a more realistic deadline. In addition, the increase of returns in the bond market was very rapid, and probably for some time, prices will be consolidated.
Accordingly, the gold price rise Spurs nervous situation in the Middle East. Nevertheless, as the FED'S steps to concretize the drawdown program direct stimulation of the growth of profitability will resume. And what about John Paulson? July 17, 2013 at the Conference, he said that it would continue to invest in the stocks of gold mining companies and gold as a protection against depreciation of the dollar.