Amid all the financial turmoil, why are gold prices getting crushed? – by Ian McGugan (Globe and Mail – December 6, 2016)

Gold, the traditional haven from financial turmoil, is now being crushed by a market for which it seems ideally suited. Over the past month, a triple helping of chaos – including Donald Trump’s election in the United States, Indian currency reform and an Italian referendum – has surprised investors in three large economies.

Yet gold has only sunk lower and lower. Instead of seeking shelter from uncertainty, investors have chosen to place their bets on renewed prospects for economic growth.

That trend continued Monday as the suddenly not-so-precious metal hit its lowest point since February, falling as low as $1,158.13 (U.S.) an ounce, despite the unexpectedly lopsided defeat of Italy’s establishment in a referendum on the weekend. A month ago, gold was above $1,280 an ounce.

The vote in Italy underlines concerns about the country’s fragile banks. In more normal times, Italy’s troubled financial sector might be seen as an excellent reason for European investors to take refuge in gold.

Similarly, India’s decision to fight tax evasion by scrapping high-value banknotes last month would ordinarily be expected to spur demand for gold in that country.

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