Barry Ritholtz writes: Why the precious metals and many of the mining companies are struggling isn’t a great mystery. The U.S. dollar is at multiyear highs and gold prices tend to move inversely to the currency. Further, the economy continues to improve, which is rarely a positive for the catastrophe metal. The financial crisis is fading from memory, and now is six years in the rear-view mirror. Why the soft yellow metal continues to trade softly is obvious; less so are the many reasons why some investors remain overweighted in this underperforming asset class.
The idea that the world is ending and the accompanying demand for guns, canned food, bottled water and gold, is having difficulty attracting new adherents in an era of falling unemployment and rising wages. Indeed, many of those who hold those views are having a hard time reconciling their misplaced faith with reality. Regardless of your thoughts on the Wall Street bailouts and the Federal Reserve’s balance sheet — and I have been a loud critic of the former and an informed observer of the latter — the general backdrop has been one of improvement.
