For any investor, owning stocks of gold for the last few days have been a nerve-wracking time. The sell-off over the last four trading sessions has been the worst since February 1983.
After hitting a high of $1900 an ounce in early Septermber, it fell to just above $1500 on Monday. But if you bought gold at it’s low of $275 an ounce back in January 2001, you would still be sitting on a fortune. In fact, gold is experienced it’s longest bullrun since the 1920′s.
The drop over the last few trading sessions however, is significant. With people such as these Greek transport workers facing the possibility of more government spending cuts, investors are concern about the possibility of a second global recession.
European policy makers are struggling to resolve the region’s debt crisis, and such fears would normally drive the price of gold higher. But with the commodity already at such lofty heights , many investors now feel the only really safe bet is cash itself, and hence the selling. Also hedge funds and other large speculators have reportedly sold off around 11% of their gold contracts. That’s based on analysis of data from the US Commodity Futures Trading Commission.
It’s still too early to say for sure whether the recent drop is a temporary air pocket or whether it’s the start of a longer term slide. But the price of gold is driven as much by investor’s hearts as their heads. It’s relative scarcity and the difficulty of extracting it will always ensure it holds a special place in people’s minds.
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