http://www.ft.com/cms/s/0/3df01184-9d3d-11e2-88e9-00144feabdc0.htmlmust have missed this one. It was linked in the 'Editor's must reads' circular email today.
April 4, 2013 9:00 pm
In Bitcoin, a virtual “currency” outside the purview of governments and banks, gold has a rival for the affections of the disaffected.
And while the Bitcoin bubble has inflated since the bailout of Cyprus, gold sold off sharply, heading close to bear market territory. It is down 19 per cent since its September 2011 peak, and accelerating.
Of course, Bitcoin is hardly the culprit, since the currency remains a niche pursuit, to say the least. Large financial forces have combined to sour the outlook for gold, and none seems likely to abate soon.
Even the writers of the GFMS gold survey, which gamely predicted a return to the mid-$1,800s by the end of the year, compared to $1,547 yesterday, gave their prediction an air of a “last hurrah” for the precious metal. Worries over the eurozone, the US fiscal situation and the global economy, all of which have driven gold higher, will abate, GFMS agrees – just not yet.
Sentiment is shifting faster, which is why European brokers in particular seem ready to call time on gold’s bull run. Gold, which trades in dollars, is getting relatively more expensive and that is a trend unlikely to reverse.
The Bank of Japan may have arrived late to the drunken party that is quantitative easing but new governor Haruhiko Kuroda has immediately ripped off his shirt and started dancing on the tables. The European Central Bank and Bank of England governors are hanging around the drinks cabinet, with varying enthusiasm. Federal Reserve chairman Ben Bernanke’s next move, by contrast, will be to dilute the US punch bowl.
That contrast – and the plodding improvement of the US economy – explains why the dollar index is up 5 per cent since the end of January.
Gold traded essentially sideways throughout the Cyprus crisis, a poor show for a supposed haven.
It might not be possible to short Bitcoin, much as you would love to. Gold, however, is a different matter.
Edit: date typo