Most of the top 50 economies in the world have engaged in one form or another of monetary stimulus since the start of 2009. Halfway through 2014, most still endeavor to keep interest rates low to encourage borrowing by consumers and businesses; nearly all of those countries or regions also hope to fuel exports with modestly depreciating currencies.

Theoretically, tactics designed to devalue a currency as well as push borrowing rates into the basement should strongly benefit precious metals like gold. And in the first three years of ultra-accommodative policies (e.g., zero-percent overnight lending, quantitative easing, etc.), the SPDR Gold Trust (GLD) roughly doubled in price.

Lost on the average precious metals advocate, however, was a three-pronged reality at the onset of 2012. First, China had hit a monumental wall in its growth trajectory, and its demand for metals of all colors began to decline rapidly. In essence, one of the largest pieces of the supply-demand equation had started to bow out. Second, from the moment that the president of the European Central Bank, Mario Draghi, declared it would do “whatever it takes” to preserve the euro — coupled with the Federal Reserve’s willingness to serve up “open-ended” bond buying with no pre-announced end date — investors overwhelmingly chose risk assets over perceived safer haven assets like gold. Even with the Fed’s tapering, easy money policies will still be in place for years to come, particularly in Japan and Europe. Third, GLD broke below a long-term moving average at the tail end of 2011. Ever since, the exchange-traded yellow metal tracker has struggled to reassert itself.

GLD 2012 to Present

Perhaps ironically, if you look back at analyst commentary when the spot price of gold had been closing in on $2000 per ounce, there were far more bullish comments on gold than bearish ones. After 2012’s lackluster showing and 2013’s decimation, though, bearish gold commentary has become the norm. Today, more “cow bell” monetary stimulus has become synonymous with piling into riskier assets. Meanwhile, Fed tapering of its bond purchasing program is now viewed by the majority as confirmation of a robust economy as well as de facto tightening that strengthens the dollar while weakening gold.

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