On Monday, June 24th, gold continued its 2013 downward slide closing at $1,277, a price last seen in April of 2011. A number of factors caused the initial weakness including rising interest rates, U.S. dollar strength, lack of inflation fears, a slowdown in emerging markets and indications from Federal Reserve Chairman Ben Bernanke that Quantitative Easing (QE) may be reduced. The sell-side has also contributed to gold's price weakness. Major sell-side firms have followed current trends and have lowered their gold price expectations. In fact on Monday, Goldman Sachs, HSBC, Morgan Stanley and UBS all lowered their gold price forecasts.
Gold miners are faring worse than gold bullion as sell-side research firms have recently focused on the negative aspects of gold miners' business models and largely ignored what we feel are the depressed valuations of many of these firms. In addition, many market participants have ignored gold's role in a portfolio through recent tough times. Now that gold is selling off, it is easy for some analysts to forget how gold at least partially protected portfolios during the turbulent times over the last twelve years. Continue Reading »