In this upside-down world of ours, the only asset class that is reliably not doing well is the one you would least expect: precious metals.
Seriously, if you took a time machine back to the year 2011, when gold was over $2,000 per ounce, and told them that the U.S. government was going to bring up another $10 trillion in debt, whoever you told would sell everything they had to buy all the gold and silver they could afford. And yet, incredibly, that would be just about the only money-losing asset they could muster.
As I type this, gold is down over $30 per ounce. For the past 13 months, gold has done nothing but fall.
SPDR® Gold Shares (NYSE:GLD):
Silver is no better. In fact, as a chart, it’s even worse. A few days ago, during the Monday zaniness, I stated that the one and only thing I bought was silver (by way of October call options). I sold them the very next day at a profit. I’m glad I didn’t stick around. Precious metals are not to be trusted.
The truly worrisome thing is that the long-term chart for gold is turning to mush. It isn’t wrecked yet, but by Jove, it certainly is looking flaccid. I have zoomed in on what should constitute a superb saucer pattern, acting as a bullish base. And yet, it’s been like nailing jelly to a tree:
Suffice it to say that my falling-out-of-love with gold, which took place a few months ago, seems to be, thus far, a pretty decent decision. And that’s a shame, because I was really hoping that gold would put the Fed in its place.