Gold price plunges to 2-year low

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#1
Gold is US$1,351 as I type this. Only last Wed it was US$1,581. Wow.

The Straits Times
www.straitstimes.com
Published on Apr 16, 2013
Gold price plunges to 2-year low

But investment guru Jim Rogers is not buying until it goes down 'low enough'

By Alvin Foo

ALL that glitters is still not gold for renowned commodities expert Jim Rogers, despite the precious metal plunging to its lowest price in two years yesterday.

The Singapore-based investment guru said gold remains ripe for a major fall and he is staying put for now.

"This may be the correction which gold needs... I'm still not buying," Mr Rogers told a media briefing yesterday on Singapore-listed Geo Energy Resources having a conditional agreement for a coal mine concession in East Kalimantan.

"I've not been buying gold because it needs a correction. Gold's only had one correction of over 30 per cent in 12 years, which is very unusual," he added.

Mr Rogers, who has been living in Singapore since 2007, joined Geo Energy as a non-executive director in December last year - his first board seat at a Singapore Exchange-listed firm.

Gold has undergone a dramatic fall in recent days and crossed into bear market territory on Friday, having plunged more than 20 per cent since a record close in September 2011, according to Bloomberg data.

Its short-term decline is almost as startling - down more than 10 per cent since it closed at US$1,581 (S$1,956) a troy ounce last week on Wednesday.

The price even dipped below US$1,400 during Asian trading hours yesterday - the first time it has sunk so low since March 2011.

Gold has been hit because investors are buying into an improved global economic outlook and snapping up riskier assets such as equities.

Several hedge funds and renowned investors such as billionaire George Soros have cut their gold exposure in recent months, while commodities analysts are tipping more price falls in the short term.

"If it goes down low enough, I'll start buying it again," Mr Rogers added, without identifying an entry level.

However, he said he remains bullish over gold's long-term prospects, expecting it to go much higher in the next decade or two.

In October 2009, Mr Rogers predicted that gold could cross US$2,000 in the next decade.

His attention is now on Geo Energy, which he said he joined as it has potential to expand.

Yesterday, the company said it had entered into a conditional sales and purchase agreement to acquire what would be its fifth mining concession this year.

Mr Rogers said: "The proposed acquisition of the five upcoming mine concessions is in my opinion, proof of the group's capacity to sustain its growth momentum."

alfoo@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
Yes. I was able to witness the first 10% drop yesterday. amazing....
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#3
Paulson either was part of it or he's going to be hurt real bad.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#4
many people thought gold is a safe asset, never expected it to be so volatile
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#5
(16-04-2013, 10:39 AM)felixleong Wrote: many people thought gold is a safe asset, never expected it to be so volatile

gold options trade at a 25 handle (depending on the termstructure) for atm (disregarding the skew). during the GFC it went to 50 for 1mth.

volatility for gold is to be expected

what gold should be good for, however, is the correlation to the other risk asset classes, i.e. u want it to be -vely correlated to something else in ur ptf. The interesting thing abt gold for the past few years is the breakdown in the correlation - it now moves in tandem with risk (equities/carry trades) to the risk on/off moods. I guess a lot of it has to do with the emergence of etfs and the weightage in people's ptf (esp the hedgies)

I still think gold has a place in people's ptf, but whether it is safe or not (and the weightage to bear) is a function of both the volatility (which is certainly high) and the cross-correlations (which seems to be breaking down in the short term).
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#6
If you hold a non-productive asset like gold, and its price drops continously, you will really start to wonder if all your initial reasons that prompt you to buy gold are truly valid. What's the intrinsic value of gold? Seriously no idea...
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#7
maybe should change focus to diamond.
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#8
maybe everyone will rush to diamond and another bubble is created lol
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#9
not much of a recovery. i think the trend is downwards from here. down to below $1,000 perhaps?
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#10
Could be bottoming out with some central banks and retail investors showing interest although there is no trend reversal yet. Institutional investors could be buying with the recovery from a steep intraday low yesterday to close higher than yesterday's lowest price.
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