Gold ‘Safe Haven’ Status Fading as Prices Drop

December 20, 2011 James Heinsman Hedge Fund News

The price of gold has fallen more than 17% since its all-time high in September, as hedge funds are forced to sell the metal and the strengthening dollar lowers its ‘safe haven’ status. Some experts in the field even say it may fall as far as $1,000 an ounce.

“Gold was a safe haven, a hedge and a speculative trade all at the same time,” said Rosecliff Capital CEO Michael Murphy. “Long gold has been a winning trade for years.”

“We expect the selloff in gold to gain momentum into 2012. Traders are finding better hedges, better havens, and better speculative commodity plays than long gold.”

Short Hills Capital’s Stephen Weiss agreed, adding that gold has a “bubble” potential.

“When an asset is thought to work in any market, that is the surest sign of a bubble,” Weiss said. “I believe we will hear about massive central bank selling to put currency in markets.”

Peter Schiff, CEO of Euro Pacific Capital, added: “These sharp drops shake out the speculators and keep other would-be buyers on the sidelines. Once the weak longs are cleared out, the trip to $2,000 and beyond will resume unencumbered by excess baggage.”

Reuters recently held a poll of hedge fund managers, economists and traders, which revealed that gold prices will likely slide under $1,500 per ounce within the next three months, and will continue at that level until at least September of 2012.

Gold Prices, Hedge Funds, Michael Murphy, Precious Metals, Rosecliff Capital,

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