Gold drops 30% in 2013
Dec 31, 2013 at 2:24 pm in General Trading by contrarianuk
Gold dropped another $15 today to $1188 a troy ounce, making it a 30% drop in 2013 and the worst performance for 32 years. In 2001, it was $271, in 2012 it ended the year at $1670.
Holdings in the largest Exchange Traded Gold Funds, which reached record levels in 2012, have dropped an average of 31 per cent this year, (Bloomberg). This is the first annual drop since the funds began trading. Assets in the SPDR Gold Trust, the largest gold ETF, have dropped to 818.9 tonnes, the lowest level in nearly five years.
No wonder the specialist Blackrock Gold and General fund, one of the star funds a few years ago has had a truly awful year! A 48% drop in 2013 due to its largest holdings being in the large global gold miners e.g. Randgold, Goldcorp, Yamana. Over 5 years the fund is now down 25%. Wow!
Things aren’t likely to get better fast given the need for many of the world’s largest miners to take further write downs on their gold reserves as the price of gold drops. Rising production costs as well as the falling gold price means that only the fittest companies will likely survive.
Newmont, with 99 million oz of reserves has said that a $100 fall in the gold price would cut reserves by 7.6 per cent. Barrick has previously said a $300/oz change in the assumed gold price would see its reserves fall less than 10 per cent, with a lower impact at its larger, more important mines.
Contrarian Investor UK
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