Just as the desert blooms when it rains, gold is expected to blossom during times of economic uncertainty and unrest. Unexpectedly, though, the dream of $1,500-per-ounce gold has been unfulfilled.
In fact, year-to-date, the precious yellow metal failed to break past the 2008 high of $1,014/oz and lost some 15 percent since the middle of February.
Gold’s decline comes amidst an avalanche of news reports with the propensity to send gold prices to all-time highs. For example, the Federal Reserve announced to devalue the U.S. dollar by purchasing $1.2 trillion worth of its own debt, which in turn moved China, the biggest foreign holder of U.S. Treasuries, to suggest an alternate world currency.
After a 54 percent drop in U.S. equities over the past few months, investors simply felt that gold is the only safe haven. Due to the transition from equities into gold, the SPDR Gold Shares (GLD) ballooned into the second-biggest ETF on the globe, $31 billion strong.
Despite the most bullish news for gold in decades, however, prices have remained stagnant. What is going on?