Gold’s inability to pull out of its rut, especially as three major central banks execute loose monetary policies that depreciate their currencies, is a bad sign for bullion-related exchange traded funds.
So far this year, gold futures have declined 24%, and now trades around $1,276 per ounce. Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) is down 23.6% year-to-date.
As gold prices faltered this year, the U.S. Federal Bank has been adding throwing billions into the economy, purchasing $85 billion in bonds per month, writes Lawrence Lewitinn for Yahoo! Finance. [AdvisorShares: Gartman on Gold]
The Bank of Japan has acquired ¥7 trillion, or about $70 billion, in bonds to stimulate the Japanese economy. [Gold ETF Outflows Accelerate in October]
Additionally, the European Central bank cut benchmark rates in half to 0.25% last week.
“I do not like gold at all here as an investment or as a trade,” Steve Cortes, founder of Veracruz TJM, said in the article. “If you look fundamentally, the world supposedly couldn’t be any better for gold. You’ve got world central banks competing to ease more than the other, with the ECB being the most recent to join the party with the BOJ from Japan and, of course, the Fed here. You’ve had the dollar very weak over the last few months. That should be a recipe for gold to soar. And, yet, it isn’t. It continues to trade lower.”