GOLD and trouble go together, because the metal is often seen as a haven in times of economic distress.
But the relationship is complicated. Prices can rise or fall for seemingly contradictory reasons.
Investment advisers these days are trying to make sense of a 25 percent plunge in gold prices in the second quarter, to roughly $1,200 an ounce, its lowest level in three years. The reasons for the dip may not be clear, but the results certainly are.
Mutual funds specializing in mining stocks lost 34.5 percent, on average. Mine operators often encounter exaggerated reactions to gold-price moves because their profits depend on the difference between the metal’s price and their production costs, which tend to be inflexible.
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