NEW YORK (November 26, 2013) – Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following comments on the current gold-market situation and outlook:
With the Dow topping 16000 and the S&P500 index reaching 1800 – both psychologically important levels – gold continues to be an innocent victim of the frenzy on Wall Street.
Trading around $1245 an ounce the metal’s price is off some 25 percent from the start of 2013 and is 35 percent below its September 2011 all-time high.
Reflecting the super-stimulative monetary policies currently pursued by the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank, U.S. and world equity markets are achieving new all-time highs as more and more investors jump on the stock-market band wagon. And, rising equity markets are, in turn, sucking investment dollars out of gold for redeployment in dividend-yielding stocks.
In particular, many hedge funds and other institutional investors who are judged by their own quarterly performance feel compelled to be where the action is – so they’re dumping gold, much held in the form of exchange-traded funds in favor tech stocks and other strong performers.
How much longer can gold suffer? Perhaps we should look to equity markets for an answer. As long as easy money keeps stock prices rising, even gold bulls want to bet on the winning horse.
Sooner or later, when the bubble bursts (or merely deflates), equity investors will really lose their heads . . . and gold stands to benefit, if not at first, certainly as the dust settles on Wall Street.
About Rosland Capital
Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.
About Jeffrey Nichols
Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.