The Changing Importance of Gold

Daniel Zurbrugg  May 19, 2009

When we first wrote an article on gold in the 4^th quarter of 2008, the yellow metal was trading around $740. We outlined at that time the reasons why gold had performed so poorly despite the challenging economic environment. We argued that the reason for the underperformance was largely due to selling pressure from investors who were looking to sell assets in order to generate much-needed liquidity. We recommended buying gold at that time, and our decision was right; gold prices rose to $930 until early February.

We received so much feedback on our article and questions regarding the outlook for gold from our clients that we decided to write an update in early February. At that time we noted that we expected gold to break through the $1,000 level later this year but expected it to remain in a relatively tight trading range of between $820 and $930. After briefly touching the $1,000 mark, shortly after writing this update in February, gold began to move lower and has since then consolidated in a price range between $860 and $940

The Changing Importance of Gold -- Seeking Alpha

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