Gold Loses Value As Gold Mining Stocks Hit New Lows
Gold lost value again, with current prices getting close to April’s record-setting lows. If you actually hold the glittering stuff, the news is sad enough, with the spot price back down below $1,364 an ounce.
And the futures market in gold is looking pretty fugly too. Reuters said that hedge funds bought in during the April collapse, which provided a bottom to the otherwise free-falling prices.
Now they’re getting out, yanking $1.4 billion from the U.S. gold futures market between May 7 and May 14. That means that gold futures prices can’t rise either.
As a result, gold futures closed on Friday at below $1,365 an ounce.
In other words, the price is hundreds of dollars down from gold’s peak, and investors don’t think it’s coming back any time soon.
Gold mining stocks, always a risky play, have responded with even bigger losses, according to a financial report in The Christian Science Monitor.
According to the CSM: “The gold miners exchange-traded fund GDX has plummeted to its lowest point since December 2008.” It closed down 4 percent Friday at $26.38, and it could get lower.
With the stock market back in raging bull territory, both individual and institutional investors are abandoning the faltering metal. As a result, gold mining is likely to slow. Marginal mines could be bought by bigger companies or shut down altogether.
But if you’re still holding gold, don’t feel like you’re the only one who missed the selling opportunity.
As gold loses values, powerful hedge fund billionaire John Paulson is feeling the pain too. His $700 million gold fund lost 27 percent of its value just in April. In 2011, his hedge funds managed $38 billion. Now it’s down to $18 billion, according to Memphis Business Journal.
That’s a lot of lost cupcakes.
Of course, if you never bought into the whole gold bug hysteria at all, you can now enjoy the last laugh. What’s your reaction to the continued news that gold is losing value?
[gold mine photo courtesy Jiri Foltyn via Shutterstock]
