Gold, gold, gold and more gold, seems to be the headline in every financial news release and media site. Everyone is talking about gold’s worse year in almost 30 years a huge decline, but what everyone seems to neglect to say that this is a huge drop after the startling climb of gold in 2011-2013 as the economic and financial crisis pushed traders to the limits with many investors and speculators running to the safety of gold as Europe look like it was going to crash, the US was headed for another great depression and China looked to be closing its walls with its economy failing. What was JP Morgan and Goldman Sack’s predicting for gold just 12-18 months ago. If memory serves me right, many of the well-known and much revered analysts and traders were predicting that gold would break the $2000 price. In fact many brokers were telling their investors it was a sure thing.
After getting off to a rocky start as December 2012 was all about the US financial crisis and the fiscal cliff, which saw traders about to jump off roof tops, 2013 rolled in. Gold remained at a premium as US lawmakers did what they do best, nothing. Eventually they pushed the crisis until later in the year, hoping that it would go away. Sure it did, it went away until a government shutdown in October forced lawmakers to take some action and indeed they did, they pushed everything to 2014.
Fortunately for them, their hopes and dreams were answered, the economic cycle changed and the US economy is now full steam ahead. The Federal Reserve was able to start their tapering process earlier than expected and market stress and fears have turned to risk on trading. Equity markets reached record highs with the Dow and the Nikkei recording multiyear records and gains. The stock market, as measured by the S&P 500 had its strongest performance this year since the Wolf of Wall Street roamed lower Manhattan. The Dow Jones industrial had its best year since 1998. The blue chip index gained 26.5% this year, hitting 52 all-time highs along the way. And the NASDAQ surged 38%, marking its best year since 2009.
If traders are moving to equities, what can we expect from gold…? Yes that is right a big tumble. Gold closed the year just above $1200 and is expected to decline into the low $1100 as the US Federal Reserve continues its tapering and unemployment tumbles. Silver is following cues from gold trading at 20.04 on the first trading day of the year recovering from its close at the end of the year by adding 678 points. Gold has made an amazing recovery this morning also to trade at 1221.50 but these climbs are not on any market changes it is just traders returning to the markets after the holidays and the beginning of the year repositioning. Copper has climbed this morning in the Asian session to trade at 3.408 as traders remain in a positive mode. Platinum has gained $16.50 to trade at 1386.50 with palladium bring up the tail at 719.70 all metals are in the green this morning as traders kick off 2014 as the year of positive thought.