Investors are rushing to dump gold funds as prices for the precious metal dropped to two-year lows and central bank reserves lost $560 billion in value, various media reported.
Bloomberg reported that gold futures in New York have fallen 18 percent in the past three months — their worst showing since 1981. Central banks, meanwhile, which own 19 percent of the world’s mined gold, took the hardest hit with price tumbles.
Fox News reported that in August 2011 gold prices stood at $1,888 an ounce. On Wednesday, the price was $1,387 an ounce. The 12-year rally seems over, experts say.
“There’s a perception that risk has been lessened and with that, investors are looking for assets that either generate income or have growth potential, neither of which gold has,” said Anthony Valeri, a market strategist with a San Diego firm, in the Bloomberg report. “We’ve seen a grab for yield, and without a yield, gold has been left out.”
Personal finance expert Dave Ramsey said Wednesday on Fox News that gold has never been a great investment. Why?
“We’ve been predicting for about two or three years is that I’ve been telling people not to invest in it, I’ve been catching a lot of flak for that, is that as soon as the economy kind of stabilized, and calmed down and sequesters and the government blowing up financially was out of the headline of the news for a few months and the economy slowly started to recover, that the fear in the marketplace would somewhat subside and as soon as it did then gold as a place to go to was less attractive,” he said on Fox News. “And stocks of course rebounding … and that caused it to lose its luster.”