Long developed market indices (US, UK, Japan), short gold is trade of 2013 so far

Riken Mehta

Follow me on Twitter @mehtariken 

Loose monetary policies by the central governments of major developed markets have made a substantial impact on various asset classes (equities, debts, commodities and currencies) around the globe this year. The major bond buying programs were aimed to kick start the struggling economy but made its way into risky assets like equities. The successful trade of 2013 so far is “long developed market equities, short bullion.”
As seen from the table, benchmark indices of US, UK and Japan have given handsome double digit returns so far this year. The momentum in these markets may continue as major indices of US (barring Nasdaq) and UK (barring CAC) are trading at life-high. Nikkei is trading close to its 5 ½ year high. Emerging markets have posted negative or single digit positive returns this year, underperforming developed markets.
Gold which was considered to be safe haven has lost its sheen (down 26%). Investors have dumped gold as US economy rebounds and the yellow metal is now trading merely 5 percent above its three-year low price touched earlier this year. Silver – more volatile than gold has lost 35% so far this year.
Developed Markets
US
UK
Japan
Indices Dow Jones NASDAQ S&P 500 DAX CAC FTSE Nikkei
YTD Returns% 
22.59%
32.20% 26.54% 18.52% 14.59% 10.73% 43.91%

 

Emerging Markets Brazil Russia India China Indonesia
Indices Bovespa RTS Nifty Shanghai Jakarta
YTD Returns%  -13.37% -5.37% 1.53% -3.21% 0.03%

 

Bullion Gold Silver
YTD Returns%  -26.17% -35.11%
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