Damage of Declining Gold Prices Felt Globally

Gold’s swift fall has ravaged hopes and livelihoods around the world – from the 1 million miners in Ghana who scour in the dirt, to thousands of executives and geologists at mining exploration firms that are running out of cash in Vancouver. Gone too are jobs for auditors, bankers and analysts in the finance capitals of Toronto and London. Investors who bet big and lost are shifting assets elsewhere and scaling back retirement plans.

Published Aug. 14, 2013

A 12-Year Bull Market Crashes

During a 12-year bull market, gold was promoted as a hedge against inflation, a store of value and a spectacular investment in its own right. A stronger U.S. economy has limited gold’s appeal and led to a slide in prices from the metal’s post-recession highs.

Gold price per ounce, weekly closes

Gold Versus the S&P 500

After peaking at $1,921 per ounce in September 2011, gold lost more than a third of its value before recovering to $1,322. The S&P 500 has increased 45 percent over the same period.

Percentage change from Sept. 6, 2011 high:

Gold ETFs: Boom and Bust

The creation of gold-based exchange-traded funds opened the gold market to everyday investors, allowing them to buy shares representing actual holdings of gold without the hassle of taking physical delivery. As investment demand grew, gold prices soared. Today, some 2,273 U.S.-based mutual funds – 32 percent of those tracked by Morningstar Inc. – have an exposure to gold bullion, mining or exploration, according to the Chicago research firm.

Total value of gold exchange-traded funds

Total amount of gold in ETFs

EKOW DONTOH / BLOOMBERG

DUNCAN CHARD / BLOOMBERG

DHIRAJ SINGH / BLOOMBERG

Gold dreams dashed

Since prices fell, Akwesi Boahene (pictured above) said he can't afford to pay his workers or rent an excavator to continue the mining operation he started with a coworker in Dunkwa-on-Offin, Ghana two years ago. Many people who moved to Dunkwa to benefit from gold’s bull market now find themselves jobless.

Planning to be the next gold hub

Dubai is pressing ahead with plans to create a gold storage, trading and refining hub on par with Switzerland, announcing in July it will build the world’s largest office tower to house commodities traders. Even seasoned forecasters say the metal's future price is hard to predict, dictated more by sentiment than standard measures of supply and demand.

Cheap gold welcomed by some

Lower prices caused long waits at jewelry stores in countries like India, where weddings and other rites are steeped in gold-gifting. “If the price continues to fall, we can always buy more,” said Supriya Gupta, a teacher in Kolkata.

Source: Data compiled by Bloomberg

GRAPHIC: DAVID INGOLD / BLOOMBERG VISUAL DATA