One of the biggest causes of the drop was evidence showing a major slow-down in the growth of the Chinese economy. A new report released this morning showed that China grew at only 7.7 percent since the beginning of 2013, compared to around 8% at the end of 2012. A combination of bad manufacturing data from the US and the Boston Marathon attacks led to a stock market sell-off on top of the gold price implosion.
After a decade of incredible prices increases, it looks like the "magic" of gold seems to be vaporizing. It's value has seen a steady decline since reaching a historic high of nearly $1900 an ounce in the summer of 2011. Combined with the 4% price reduction of last Friday, Monday's drop pushed gold into an official "bear" market (defined as a 20% drop from recent high value).
The drops have come as a huge surprise to many, especially the thousands of Americans who have invested most or all of their retirement savings in physical gold or gold-related investments in recent years. Many financial experts have been expecting gold prices to begin rising again due to the Federal Reserve's stimulus-focused bond-buying/money-printing actions.
Also, to the dismay of many right-wingers and Obama-haters in the US, the country's economy is slowly improving and massive inflation has not hit. The 2012 election has not yet led to the dramatic economic problems so many have been betting on with gold. According to metals trader Matt Zeman:
"Gold has had all the reason in the world to be moving higher — but it hasn’t been able to do it... The situation has not deteriorated the way that a lot of people thought it could."
We say: Oh good, now we can afford to buy some more gold! :)
Learn some mo': Price of Gold Takes a Flashy Fall; Other Markets Follow
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