According to Mariette Liefferink
But a review of the gold price shows that it has, in fact, largely been in a decline since September 2011.
Although one or two enthusiastic investors said it could be considered an opportunity to invest, the majority view, both locally and internationally, is that gold is unlikely to regain the R1895 an ounce highs experienced in September 2011. It is more likely to settle between $1500 and $1300 an ounce, perhaps even going as low as $1200.
Spot gold having dropped to $1 321 on Tuesday, the lowest price in two years, was trading at $1 339 an ounce on Thursday.
Those still optimistic about the future of the metal point out that central banks are still keen buyers of gold and the experience of Cyprus has supported the usefulness of having gold reserves to fall back on.
The World Gold Council in London, however, has said that the central banks, which own 31 694.8 tonnes, or 19% of all gold mined, will be the biggest losers if gold does not recover some of its losses.
And then there was the view put forward somewhat cheerfully by the New Yorker journalist, John Cassidy, that there was still plenty that might go wrong, such as Spain or Italy being forced into emergency bailouts or slowing growth in China or the United States, which would result in investors scuttling back to gold.
The extent of the dramatic drop in the price took analysts by surprise, the evidence of which is contained in a poll undertaken by Reuters in January, which revealed that 37 banking analysts and consultants believed that gold had a year, maybe even two, of high prices ahead of it.
Resource division
A number of international banks forecast that gold would average more than $1 800 an ounce this year, a sizeable increase from $1 668 in 2012, according to Reuters.
But Saxo Capital Markets said in a note this week that gold had "spent the past 18 months consolidating in a wide range between $1525 and $1800 an ounce. But, since September 2012, we have witnessed a slow drift lower." The investment company said that it was still too early to make a call for a complete trend reversal, but it warned in earlier outlook reports that a drop below $1500 an ounce "would be a potential game changer".
For Peter Major, the head of the mining and resource division of Cadiz Corporate Solutions, and David Davis, a mining expert from SPG, a sustained drop in the gold price would have a significant impact on South African mines, which he said were believed already to be operating on very narrow margins.
"The problem with gold is that it is based on sentiment, so supply and demand do not come into play when it comes to this commodity. Cutting back on supply will make little difference," said Davis.
He did not believe that gold mining companies would be able to deal with a sustained drop in the gold price without a drastic review of their costs and operations.
Major said mines might have to reconsider operations that produce lower-grade gold and concentrate on those that had a higher grade to recover costs. Davis believed that it would be about 18 months before the reduction in the gold price was seriously felt by South African mining companies. Both he and Major said demand for scrap metal would decrease first.
Gold reserves
So, what happened to gold, the darling of many investors for more than a decade, to lead to such a sudden decline? To quote Davis, a "cocktail" of events drove gold down, although he said he believed the mood has been bearish for while. Bullion started to lose ground as increasing positive data emerged from the US indicating economic recovery, curbing the demand for gold as a hedge against the hard times. As Anthony Valeri, a market strategist for LPL Financial Corporation in San Diego summed it up when he spoke to Bloomberg, "There is a perception that risk has lessened and, with that, investors are looking for assets that either generate income or have growth potential, neither of which gold has. We have seen a grab for yields and without a yield, gold has been left out."
And then there was Cyprus. The embattled country announced earlier this month that it planned to sell its gold reserves to raise about €400-million to fund its part of the bailout, causing panic in the market.
Then, on April 10, Goldman Sachs cut its gold-price forecast for a second time in six weeks, citing acceleration in US economic growth and a decline in gold prices over a number of weeks to below $1 600 an ounce.
Prior to this, there were a number of gold downgrades by investment banks amid concern that other struggling eurozone countries might follow Cyprus and sell some of their reserves.
Gold came close to $1 900 an ounce in late 2011, but ever since has traded within the $1150 to $1 750 range. On February 20, it hit what is known as the "death cross", which refers to when a downward sloping 50-day moving average crosses a 200-day downward sloping average. This is seen as an indicator that the price could fall sharply.
This has happened three times in the past five years, and in two of the instances triggered a 15% and 8% sell-off, according to Saxo Capital.