Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
American economist Paul Krugman recently noted that in the Federal Reserve Bank of New York, “hundreds of thousands of gold bars sit, doing nothing in particular.“
That’s also true in pretty much every country in the world. Central banks hold foreign reserves and in most cases gold represents a big chunk of the value. The US for example has more than 8,000 tonnes of gold.
But this year was different than other years because while previously the gold became more valuable while doing nothing, this year gold actually lost value – about 28%. As a result, the value of foreign reserves also fell.
At MINING.com we’ve compiled a list of the biggest losers of 2013.
About the calculations
The numbers are based on the World Gold Council’s January 2013 data, which uses the end of month London PM fix gold price from November 2012 ($1,726) and countries’ foreign reserve gold holdings reported in that month. Dollar amount losses are calculated using the London PM fix gold price of December 30, 2013.
In the interest of providing a general summary, the calculations are based on the assumption that there were no changes in holdings. Germany was the only country on the list that decreased its gold holdings during the year, though by less than one tonne.
Portugal
Queluz National Palace, Portugal | Photo by Jose Ignacio Soto
Portugal likes gold. In fact, in 2012, 90% of its foreign reserves were in gold. As a result, the country lost about 25% of the value of its foreign reserves as the gold price tumbled – an $8 billion loss.
Greece
Hosios Loukas monastery, Greece | Photo by Anastasios71
Greece also had a hefty amount of its foreign reserves in gold – just about 83%. The debt-ridden country’s account lost 23% of its value this year.
USA
Prometheus statue, NYC | Photo by fototehnik
In terms of total dollar loss, the US was the biggest loser this year. The country’s foreign reserve shed $150 billion of its value as a result of the gold price drop. The yellow metal made up 76% of the account.
Venezuela
Former Venezuelan President Hugo Chavez who repatriated much of Venezuela’s gold | Photo by Northfoto
In Venezuela, the precious metal represented about 75% of the foreign reserve – a value of about $22 billion in late 2012. Today, this gold is worth $15 billion.
Germany
Golden Rider statue, Dresden | Photo by np
Germany has nearly 3,400 tonnes of gold in its foreign reserve account. In 2012, this represented 73.5% of its value. As a result of the precious metal price drop, this gold is now worth $144 billion – a $62 billion loss.
7 Comments
esqualido
Paul Krugman:” “hundreds of thousands of gold bars sit, doing nothing in particular.” (to the sound of millions of fire extinguishers round the world being tossed in the bin for the same reason.)
JH
this is crazy. Those stupid CB. Held gold doing nothing but collect dust appreciated the value of their holding by 13.2% compound interest from 2004 to 2013 (9 years) even after a 28% drop from the high. Silver did 13% compound interest 2004 to end 2013 and there was a huge spike up in the middle.
Why don’t you mention that? Traders might have lost their lunch, but steady gold accumulators are still laughing.
By comparison, the DOW went from 10,000 to 16,000 over the same period, and yes there was a spike, but a spike down of 30% (does that look a little like 28% gold down currently), before climbing to 16,000 currently (the future for gold?)
The DOWS compound interest from 2004 is 5.4%. If you bought with both hands at the low of 7000 your compound interest would have been 9.6% over 6 years.
Gold still looks brilliant 13.2% p.a compared with 5.4% or even 9.6%. No need to worry about stupid managers, dodgy deals, market share losses, technology redundancy, take over raids, high frequency trading.
Yep stupid is as stupid does, gold just sits and watches and holds its value.
May I ask who sponsors this website? With respect, I always thought Frik was the poorer journalist here. Seems he may have some competition.
It really isn’t hard to provide balance and broader context.
Healeyguy
JH
Why start your comparison with 2004? Why not try, say 1979 or 1980.
Gold has no more or less intrinsic value than a Rembrandt painting, a diamond or a classic car. Why can’t gold bugs get this into their heads.
JH
I don’t see your point. Rembrandts, classic cars, diamonds have all appreciated. What is it I need to get in my head? Perhaps others may need to get into their heads that paper dollars are worthless. The share market is pumped up digital dollar creation, and if that works so can BitCoin. whats the difference between the two? Dollars and BitCoin have no intrinsic value either.
What perhaps HealyGuy needs to get in your head is that as the share market has been manipulated up by zero interest rates, massive digital dollar printing, and so has the gold market been manipulated down, so your dollars have nowhere else to but the share market. It is completely fake, not representative of price discovery, its a ponzi scheme where everyone thinks they are smarter than the next guy and will get out before them.
deykenya
We happen to live in a dream world, movies either show passion or war, economies show recession or growth, all very intellectual denying the emotions of good governing it is this reverse that MORAL’s take charge when we loose this in any equation the accountability is progress or retardation just as quality when quantified become glamour Gold loss could have benefited in eradicating have and have not gap increasing consumer ability domino effecting increased jobs healthier life with less stress economical rendering to good governance in governing to meaningful governments.
Lewis Stubbs
By the end of 2014 the holders of gold will have taken another beating.
Thierry Poirey
I thought this information was useful and there is no need to react as if the writer had attacked gold. It is just a factual report, which highlights how certain countries are exposed to gold through their reserves.