What really happened to the German gold housed in the United States?

http://www.glennbeck.com/2014/01/09/what-really-happened-to-the-german-gold-housed-in-the-united-states/

It may soon be time to go for the gold

http://www.marketwatch.com/story/it-may-soon-be-time-to-go-for-the-gold-2014-01-02

End of the gold rush

http://www.thestar.com/business/2013/12/30/end_of_the_gold_rush.html

Stock markets are gaining, and people are optimistic about the economy, which means one other thing: the bad news bears are sniffing around gold.

After 12 consecutive years of the price going like gangbusters, the shine has started to come off the precious metal. It has tumbled 30 per cent this year, and its prospects in the near term aren’t, well, golden.

Battered bullion is headed for its first annual price decline since 2000, signaling what some say is the end of the gold rush that saw the price surge six-fold and an unprecedented mining super-cycle.

“To me, it’s like the sound of a huge spaceship coming down,” says Matthew Hart, author of Gold: The Race for the World’s Most Seductive Metal.

Though exploration and mine construction have pretty much dried up amid the metals-market downturn, Hart says the fickle yet fascinating commodity continues to capture the world’s imagination.

“We are at the end of the greatest gold rush in history. This one was totally investment-driven rather than an area play like the Hemlo discovery (in Northern Ontario in the 1980s) or the California gold rush,” he says.

Hart is referring to the $33 billion (U.S.) worth of bullion that is traded every day in London thanks to the emergence of gold exchange-traded funds (ETFs).

People once clutched gold bars for comfort during times of economic upheaval. But over the last decade, investors mostly scooped up ETFs to get exposure to gold without the hassle of physically buying the metal. (A standard 400-ounce brick at Fort Knox, for instance, is the size of a Kleenex box and weighs 27 pounds.)

Investors dumped as much gold from exchange-traded products in 2013 as had been purchased in the previous three years, according to data compiled by Bloomberg. They sold 789.3 metric tons since the start of January, pushing holdings to the lowest level since March 2010 and wiping $67.5 billion from the value of the funds.

Even billionaire John Paulson said recently he wouldn’t personally invest more in his bullion fund.

Interest in gold melted this year, with the prevailing view on Wall Street that things are looking up, say analysts. Simply put, a stable economy is gold’s worst enemy.

“Gold feeds on panic,” says Hart. And there was plenty of that following the subprime mortgage lending crisis that blew up in September, 2008, taking the global economy, stock markets and the U.S. dollar down with it.

Just two years ago, gold bugs were still happy. Not only did they figure bullion would hit $2,000 (U.S.) an ounce, some were saying it would soar to $5,000 or even $10,000 as the economic outlook worsened and investors flocked to the historic safe haven.

Those wild price predictions never came to pass. The 70 per cent price run-up from the end of 2008 — as the global recession took hold — catapulted gold to an all-time high of $1,921.15 an ounce on Sept. 6, 2011.

The U.S. central bank pumped more than $2 trillion into the financial system following the 2008 crash, increasing fears of faster inflation and a weaker U.S. dollar — the perfect environment for gold lovers.

But inflation didn’t materialize, and the U.S. dollar is strengthening. Gold and the greenback tend to move in opposite directions.

“Not since 1981 has gold fallen as heavily as it has this year,” notes Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch.

“Certainly since the Lehman Brothers crisis, gold was seen as the must-hold asset,” he says, referring to the firm that collapsed September, 2008.

Speculation now is that a U.S. recovery will curb demand for the metal as a safety net. “The economy is picking up and everyone is very bullish on the U.S. dollar, which is not a great backdrop for gold,” adds Hartnett.

Of course, the price decline has hurt the mining industry, which was riding high over the lengthy bullion bull run, building a slew of new mines, expanding old ones and exploring on every continent except Antarctica.

This year’s dismal gold-price performance forced mining companies to make at least $26 billion in write-downs plus the cancellation of $20 billion of capital spending projects, resulting in thousands of job cuts and tumbling share prices.

Toronto’s Barrick Gold Corp. had the highest-profile problems. Swimming in debt and with a share price that lost half of its value, the world’s largest gold miner suspended construction on its prized Pascua-Lama project on the border of Chile and Argentina amid soaring costs and legal roadblocks to build one of the world’s largest, untapped deposits.

And just as founder Peter Munk announced his retirement from the board, his successor John Thornton told reporters he may even consider hedging — a controversial strategy of forward-selling gold to protect miners from the falling price.

Hedging was a common practice in the 1990s and into the new century, when gold prices were stuck below $400. But it proved costly as the gold rally took off after 2000. Barrick and AngloGold had to spend billions of dollars unwinding their hedge books after gold’s upswing left them selling the metal at well below spot prices.

“The cycle is classic. Mining companies have gone into the back and bolted the door,” says veteran mining analyst Barry Allan of Mackie Research Capital in Toronto.

He says “everyone is in survival mode”, from the junior exploration companies who trade on the TSX Venture Exchange to the seniors, who have cut exploration budgets up to 25 per cent this year.

Bullion has tumbled from a high of nearly $1,700 an ounce at the start of 2013 but now hovers in the $1,200 range. Gold closed Monday at $1,203.80 an ounce.

It plunged $41.40 to a three-year low of $1,193.60 on Dec. 19, after the U.S. Federal Reserve announced it would begin to taper its monthly bond purchases in January. These first steps away from a historic era of monetary stimulus were what sent investors fleeing to gold in the first place.

“It’s the sheer optimism about the global economic recovery that has come to impact bullion,” says Allan. He predicts the gold price will remain flat at $1,250 next year.

Goldman Sachs Group Inc. sees prices falling further to $1,110 in the next 12 months.

The good news for the industry is that metals-hungry China still has a voracious appetite for gold.

China’s net imports of gold from Hong Kong reached 129.9 tons in October, the second highest total on record, Bloomberg reports.

Chinese consumer demand for the metal rose 30 per cent in the 12 months through September, according to the World Gold Council. That puts it on track to overtake the world’s top consumer, India, where purchases gained at a slower rate of 24 per cent amid government import restrictions.

“It’s hard-wired into the human brain that gold will always have some value,” Hart says.

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