Tom Taulli: Gold Will Have an Easier Go in 2014
Editor, IPO Playbook
Despite many investors and analysts predicting a decent year for gold in 2013, the yellow metal did not have much luster in 2013. In fact, it was outright dirty, with the spot price of gold suffering its worst rout since 1981.
That’s pretty ominous, and has me worried about that period from 1981 to 2000 where gold was dead money. It was brutal.
But that’s not to say there will be a repeat performance.
This time around, there’s much less supply, and with gold prices sitting around $1,200 per ounce, miners have even less incentive to pump up production. The costs are just too prohibitive.
Also, going forward, the U.S. is likely to see more pressure on inflation. The Fed has taken unprecedented efforts to crank liquidity, which much of it going into equities so far. But as the economy continues to improve, we should see consumer prices start to inch north.
At the same time, bearishness for gold is at extreme levels as many investors have taken heavy short positions. So any signs of inflation or adverse geopolitical events could put the sparkle back in gold in 2014.