In light of gold’s (GC=F) flash crash on Monday, with the commodity dropping to its lowest price since March at $1,730.13 an ounce in New York by late afternoon, some investors may be growing wary about its efficacy as an inflation hedge in the near term. According to J.C. Parets, Allstarcharts.com founder and chief strategist, gold has become one of the worst investments over the past year.
“Nobody wants your rocks, right? I mean, that’s the theme … the gold bugs have come up with every story under the sun as to why gold should go up, and it doesn’t,” Parets told Yahoo Finance Live. “In fact, over the last year, you’d be hard pressed to find a worse investment over the last year [than] gold.”
As inflation reaches the highest levels seen since 2008, gold prices have fallen over 16% in a year — down over $300 from an August 2020 peak of $2,069 per ounce. Just a year ago, institutions like Bank of America (BAC) projected that gold’s value could skyrocket to as much as $3,000.
“I mean, literally, you could have bought anything and it would have made money but not gold, you know, so it just really is the worst of the bunch,” Parets added. “And even in commodities, literally every commodity in the world is going up, except for gold.”
Parets joined Yahoo Finance Live to discuss the latest market action for equities, cryptocurrency, and commodities. Allstarcharts.com is a technical analysis publication for hedge funds, mutual funds, financial advisors, family offices, and individual investors which provides technical analysis commentary across all assets, according to its website.
Indeed, futures on other commodities such as crude oil (CL=F) and natural gas (NG=F) have demonstrated strong rebounds from pandemic-era lows, while precious metals like gold, silver (SI=F), and platinum (PL=F) continue to struggle. According to Parets, the reason for gold’s persistent slump is simply low demand in conjunction with growing supply.
Until market conditions for gold improve, Parets noted that he is going to steer clear from investing in bullion. However, he is confident that gold eventually returns to last year’s highs.
“It’s really a supply and demand game,” Parets said. “Some people like to have conspiracy theories about gold and [it being an] inflation hedge, and [they’re all just] stories. And so you can listen to those stories, or you can focus on the only thing that’s actually ever going to pay anyone, and that’s the price of gold,” he said.
“The problem is that I don’t know how long it’s gonna take,” Parets said. “I don’t think it’s gonna happen tomorrow or next month — probably not even this year, maybe next year, maybe the year after that.
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV