“….If it was just ETFs and some retail money, then it
wouldn’t be so bad. The real problem comes from hedge funds. While mom and pop
and the die hards might sit on their gold holdings, hedge funds don’t have that
luxury. Funds have monthly and quarterly performance targets. Watching a market
meltdown doesn’t bring out buyers, it forces selling.
This is especially true in assets that have seen “mission
creep”. It is one thing for a commodity focused hedge fund to lose on gold. It
isn’t even so bad if a global macro fund does, but the problem is when funds
that really don’t have much business being in gold have added positions. As a
“hedge” or as an “alternative”. Whatever the excuse was, many funds had
accumulated some gold….
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