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Gold And The Terrible, Horrible, No Good, Very Bad Day

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Loading up on gold this weekend to take advantage of Friday's swoon—or at any point over the last two years—may have been premature.

Gold continued to take a battering Monday, shedding more than $100 per troy ounce after China registered weaker-than-expected growth, sparking a new wave of selling on concerns that China and India – the world's two biggest buyers – may slow purchases.

Gold is on track to post its biggest-ever one-day decline in percentage terms since February 1983.

Gold for April delivery, the front-month contract, was down $144.60, or 9.6%, at $1,356.40 a troy ounce in late morning trade on the Comex division of the New York Mercantile Exchange, its lowest price in more than two years.

"Everybody that's bought for the past two years, since April 2011, is losing money," said Ira Epstein, director of the Ira Epstein division at the Linn Group. "It's a sea of red," he said.

The collapse in gold prices has rendered some hedge fund managers speechless. Others, not so much.

“The recent decline in gold prices has not changed our long-term thesis,” John Reade, a partner and gold strategist at Paulson & Co., said in an e-mailed statement. “We started investing in gold at $900 in April 2009 and while it’s down from its peak to $1500, it’s up considerably from our cost….”

“Federal governments have been printing money at an unprecedented rate,” said Reade. “We expect the strengthening of the economy and stock market to cause money supply to rise more than real growth and eventually lead to inflation. It is this expectation of paper currency debasement which makes gold an attractive long-term investment for us.”

Gold On Track for Biggest One-Day Fall Since 1983 [WSJ]
Gold tumbles as China data hits commodities, stocks [Reuters]
Einhorn's big bet on gold slammed by sell-off [Reuters]
Paulson Loses More Than $300 Million as Gold Declines [Bloomberg]


By Agnico-Eagle (Agnico-Eagle Mines Limited) [CC0], via Wikimedia Commons

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