Is There Any Hope Left for Gold Bugs?
It has been a brutal year for gold bugs. After enjoying twelve consecutive annual gains, gold is one of the worst performing assets in the market this year. Several firms lowered their price targets, and a headline-grabbing economist renewed calls for the demise of the precious metal. However, there is still a great deal of interest in gold.
Over the course of only two days in April, gold plunged $200 to reach its lowest level since February 2011. In the process, gold posted its worst one-day percentage drop since 1980, and the largest fall in dollar terms on record. On a technical basis, gold reached its most oversold reading since at least 1975. The dismal performance was followed with a 5.4 percent loss in May. In fact, gold has now declined for seven of the past eight months.
Despite the recent price movement, some companies and countries see a bright future for gold. Deutsche Bank recently opened its second largest gold storage facility in the world in Singapore — a small Southeast Asian city-state. The facility is capable of holding up to 200 tonnes of gold in order to meet rising demand from wealthy investors that prefer having direct access to physical bullion.
Singapore is already one of the biggest financial hubs in the world, and removed a sales tax on gold last year to boost its share in the global gold market to 10-15 percent, compared to the current 2 percent. JPMorgan Chase – America’s largest bank by assets – also has a new facility in Singapore.
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