CHICAGO, July 16 (Reuters) – As U.S. interest rates have
risen, owning gold has been a loser’s game for anyone is trying
to hedge against inflation.
Gold isn’t a smart inflation hedge, but many people have
been using it that way because they think they have few
A low-inflation rate has been punishing to gold investors
for the past three months, and the Consumer Price Index has been
running well under 2 percent this year. As evidence, the leading
gold bullion vehicle, the SPDR Gold Trust ETF, has lost
nearly a quarter of its value over the past year as investors
continue to sell out of their positions. It was down 23 percent
year to date through July 12.
Stocks of gold-mining companies, which can get bruised even
more than spot metal prices, have fared worse. The Market
Vectors Gold Miners ETF, which holds leading mining
companies such as Barrick Gold Corp and Newmont Mining
Corp lost nearly half of its value year to date, off 47
To be fair, gold prices have rebounded in recent weeks. Gold
reached a near three-week high after Fed Chairman Ben Bernanke
hinted that a highly accommodative policy was needed for the
foreseeable future. But, at around $1,285 per ounce on Monday,
gold is no where near it’s high of $1,889 in 2011.