How appealing is gold priced in other currencies?

The gold naysayers are still out there in droves, other than Lady Gaga who is ensconced after surgery in a custom-designed, 24-carat gold plated wheel chair.

There is no denying that gold is off to its worst yearly start in a quarter century and that just in February investors sold 106 metric tons of gold from gold ETFs. (Even so, this is just a small portion of the fund’s holding and gold has gone up since then, a bullish sign) The newspapers headlines are full of eulogies for the gold bull market saying it’s finished, washed up, over.

This sort of stuff gets us, contrarians, excited. The best time to buy into the gold market is when investors are at their most bearish.

Still, legendary investor George Soros reduced his stake in a gold ETF by 55% in the last quarter, but we don’t know if he has piled back in or not. Soros Fund Management LLC owned about $97 million of the yellow metal through the SPDR Gold Trust as of Dec. 31, according to regulatory filing. John Paulson, the largest SPDR investor, kept his gold holding valued at around $3.4 billion, unchanged last quarter, his filing showed.

Gold has underperformed so far this year. That is the unsavory truth. (We note that gold didn’t decline for all investors. Gold priced in yen rose this year and the same was the case in terms of the British pound.

With global stock markets at a four-year high and the dollar near its strongest in seven months, eight of 13 analysts surveyed by Bloomberg said they expect gold prices will be lower in 2014 than this year. The median estimate of the 13 analysts is for a record annual average of $1,700 in 2013, falling to $1,638 in 2014.

There seems to be a general sentiment that the world economy is improving. Many are speculating that the Fed is going to stop printing money after 2013 (through QE that is).

That’s nice. But things are not always what they seem. We don’t see reasons for this enthusiasm about economy recovery just yet. We don’t see an end to quantitative easing. The Fed is increasing its already large $3 trillion holdings of Treasury and mortgage securities by $85 billion a month. Bernanke has made it clear in his most recent testimony before Congress last month that he will not make any changes until unemployment rates fall to 6.5% or lower. He plans to hold short-term interest rates near zero and has no plans to increase rates.

The truth is that fundamentals since gold reached its apex a year and a half ago have not changed. Central banks around the world are accumulating more gold, and announcing much more quantitative easing than even before.

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