Sold Gold Prior to Downturn

An Exclusive Interview with the's Senior Strategist who Predicted Gold's Decline in 2012.

Thomas Wentworth, a senior strategist at Algo Capital, the financial house which operates, is predicting that gold will hit record lows in the near future. In late 2012,'s analysts correctly predicted the precious metal's price decline and by January 2013, the fund had sold the majority of their gold holdings prior to this year's downturn.

“Since 2008,” says Wentworth, “the United States Federal Reserve and other central banks have been printing trillions in currency in order to help add liquidity to their ailing economies.” This “stimulus”, also known as Quantitative Easing, depreciated the value of paper money because its quantity in the marketplace increased. “Thus,” says Wentworth, “central banks helped ignite the rush to gold as an asset whose value cannot be decreased by government policy or economic downturns.”

Indeed, the actions of global central banks stimulated an explosion in the value of gold, with the precious metal soaring to USD $1921 in 2011. Since then, global economies have partially rebounded from the worst of the financial crisis, and central banks in the United States and Europe have started to make references to the coming reduction of their monetary stimulus activities.

According to recent data, in June 2013, consumer confidence in the United States has jumped to its highest level in more than five years. In the same month, durable goods orders were higher than expected and new homes sales rose to their strongest level in nearly five years. These economic indicators also help explain the reduction in gold prices.

Predicting that economies worldwide would take a turn for the better and that Quantitative Easing would begin to wind down in 2013, Algo Capital market strategists believed that gold would lose some of its “safe heaven” appeal. They began divesting in gold in late 2012. Today, from its USD $1921 peak, gold has plummeted to a three year low of USD $1224 this month.

Is there still room for further depreciation of gold? Thomas Wentworth, who helped develop the industry's leading algorithmic trading robot for, believes the answer is yes.

“We are positioned for the extension of the collapse of gold, with our analysis signaling that the plunge of gold has just begun and may carry on well into 2014.” In 2014, the United States Federal Reserve is expected to terminate its quantitative easing program altogether, thus halting the flow of cheap dollars into the market. Accordingly, gold may then fall below the USD $1000 level.

“There comes a time when an asset inflates and then deflates,” says the strategist. "Barring any dramatic economic or geo-political development, we see this as the beginning of gold's deflation.”

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