Gold traders see better near-term opportunities elsewhere

But the metal remains an important hedge for some.

Steven G. Kelman 28 December, 2016 | 6:00PM

Last month Turkish president Recep Tayyip Erdoğan appealed to his citizens to convert their foreign currency into gold or Turkish liras. The Turkish currency has lost about one-fifth of its value so far this year.

I suspect that very few of his subjects will take his advice, given the Turkish economic environment since the attempted coup last summer, mass arrests, and the view held by many people everywhere that investment advice from politicians, unless accompanied by incentives, should be ignored.

Furthermore, cynics might expect that President Erdoğan's plea to buy gold will be followed by its confiscation should Turkey's foreign exchange reserves be depleted. Add to that the fact that gold has been a dismal performer since July, when it was trading at just over US$1,365. Its recent price was about US$1,132 for a decline of about 17%. In Canadian dollar terms, its decline is about 15%, and when measured against the euro and UK pound, 12% and 14% respectively.

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Steven G. Kelman

Steven G. Kelman