Dan Burrows: Gold Doesn’t Have to Rebound
Feature Writer, InvestorPlace.com
After plunging 28% last year, you might think the SPDR Gold Shares (GLD) is a bargain.
Forget about gold in 2014. There’s no law that says the precious metal and related ETFs have to bounce back after a brutal year. Indeed, the current bear market in gold started in 2011, and the key driver supporting a higher spot price of gold and rising gold prices per ounce is long gone.
That would be fear, which has subsided considerably. Central bank stimulus stoked fears of rampant inflation. That didn’t happen. Fears of economic, financial and political collapse were greatly diminished when Greece, Italy, Spain and Cyprus didn’t destroy the euro. Like a Harold Camping prediction, the apocalypse failed to materialize.
A higher spot price of gold and rising gold prices per ounce require fear — abundant fear. With the worst of the euro crisis behind us and the central bank tapering its bond-buying program, there isn’t sufficient end-of-the-world anxiety to make gold a winning bet.
At least until the next global crisis.