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Top 10 Gold Stories of 2013

Friday, 03 January 2014 06:42 AM Current | Bio | Archive

While 2013 was the year to forget for many gold investors, it was also a fascinating year for those of us who follow gold.

Here is my list of top 10 gold stories that mattered:

10. In April, Cyprus government toys with selling gold reserves to partially fund its bailout, but the central bankers who have the final say decide no. Gold tumbles as markets bake in the possibility of 447,000 ounces of new supply but prices fail to recover after the potential sale is taken off the table.

9. More states are taking steps to recognize gold and silver as legal tender. Concerned about the value of the U.S. dollar after the federal government printed $4 trillion of stimulus and counting, Arizona and Utah became the first two states to let gold and silver bullion coins to be used as currency, which the Constitution allows. A dozen other states are exploring this option.

8. Gold miners cut back on production capacity, as gold prices sink to break-even levels. Letting costs rise during the boom years meant that many gold mining companies were only breaking even or even losing money with gold prices hovering around $1,200 an ounce.

7. India, the world's largest purchaser of physical gold, effectively bans gold imports because record demand is hurting the rupee. China speeds past India to become the world's largest purchaser of physical gold.

6. Overall, many countries' central banks added to their gold reserves. Shoring up their sovereign currencies after printing vast amounts of stimulus to get their economies moving again, central bank gold buying was red hot most of the year before cooling down at year's end.

5. Gold prices decouple from the demand for physical gold and they begin to move in different directions. Some think it is due to the heavy influence or manipulation of paper gold investments like futures contracts and exchange-traded funds, of which there were up to 80 contracts on each ounce of physical gold, and the distorting impact of the Federal Reserve's quantitative easing programs.

4. The West abandons gold while the East continues its buying frenzy. Investors mostly in the United States and some in Europe flee gold for higher returns in stocks. India and China drive the global demand for physical gold to dizzying new heights. Their growing middle class, with a cultural preference for gold as a storehouse of value, buys up the gold that Western investors abandoned.

3. After several false starts, the Fed starts tapering its quantitative easing programs amid mixed, but leaning positive, economic growth data despite not meeting its inflation or employment goals. Investors who bought gold fearing the worst sell their holdings.

2. There is record worldwide gold demand fueled by more affordable prices, a lot of supply from Western investors selling, record demand by Eastern investors and the world's central banks adding to their gold reserves.

And the year's biggest gold story:

1. Gold's decade long bull run ends. After a spectacular 10-year climb to a historic high in 2011, gold suffered its biggest fall in 30 years. Starting 2013 near $1,700 an ounce, gold ended the year around $1,200 an ounce, an almost 30 percent loss in 12 months.

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While 2013 was the year to forget for many gold investors, it was also a fascinating year for those of us who follow gold.
Friday, 03 January 2014 06:42 AM
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