From Precy Dumlao, Opalesque Asia – Gold prices are declining and some investors are losing faith in the metal, although not all of them.
A report by the Sydney Morning Herald says that George Soros had sold his gold holdings in the last quarter and that Goldman Sachs Group predicted more declines after the longest slump in four years. According to U.S. CFTC data, the Soros and Goldman Sachs funds and other large speculators held 74,432 short contracts on May 14 (and 67,374 a week earlier), SMH reports, and the net-long position dropped 20% to 39,216 futures and options, the lowest since July 2007. On Monday (May 20), the price of gold fell 1.5% to $US1,338 an ounce, the lowest price since April 18, and traded at $US1,348 in Singapore .
Furthermore, in Australia, seven of the ten worst performing stocks are gold mining firms, the report adds.
Last Monday, Bloomberg reported that hedge funds had increased their bets on lower gold prices after investors pulled a record $20.8bn from bullion funds this year.
"I think hedge funds have begun accepting the fact that deflation is a bigger threat to the U.S. economy now than inflation. So, the argument of owning gold as an inflation hedge no longer holds water," Adam S......................
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