Gold bashers are back in business.
And for the first time since the 2008 meltdown, gold stashers seem to be at the losing end of the tug of war.
No doubt, those sold on gold continue to point to the precious metal’s safe haven status and its value as a hedge against volatility. They’re just not as loud as the detractors.
Those down on gold, which include portfolio managers, economists and equity managers, argue the glory days are in the rearview mirror.
Read: Gold getting precious little investor love
A look at the facts, fundamentals and fund flows, find gold is not only losing the battle, it’s also taking gold ETFs down with it.
The yellow metal’s given up $300 from its record high of $1,900 per ounce in 2011. And there are a slew of factors making sure it stays at that level, or falls further.
Central banks show no signs of changing current loose monetary policies. That will suppress inflation – which is the other driver of bullion prices – for the foreseeable future.
As well, signs of strength in global economy, improving investor sentiment, and a continuing equities bull run are working collectively to dampen investor desires.
And as growing numbers of economic indicators suggest the recovery is solidifying, central banks’ bullion buying will likely wind down.
The overall shift away from defensive assets and falling prices have had a knock-on effect on gold ETFs, which now are facing a sell-off.
Read: Gold’s had its day in the sun: economists
What experts find particularly disconcerting is that for the first time since the introduction of gold ETFs in 2003, their price is falling in tandem with that of gold.
Another indication of investor aversion, according to a report in FT.com, is that ETFs have shed 140 tonnes of bullion since the start of this year. The trend is likely to last as investors continue to flock to equities for a fear of missing out on that rally.
The big rotation has also shaken up some established beliefs about ETFs. As this FT report says, the latest slip sits at odds with the theory that ETF markets are driven by longer-term allocation rather than short-term trading.
For investors, until the next event triggers a stampede back into gold, its merits will pale in comparison to equities or real estate.