Like a deer in the headlights

Iraq has purchased 1.1 million — yes, MILLION — ounces of gold, according to Kitco.

Some of Kamaaina Loan's gold inventory.

Some of Kamaaina Loan’s gold inventory.

Analysts speculate that this quiet buying helped support the world gold price recently. Shucks, we thought it was because the world was afraid Vladimir Putin was starting World War III.

In any event, if Putin spooked the market, that’s over. Gold was back down to $1312 in New York today. It had nudged up to $1380, which was $100 an ounce higher than at the beginning of the year.

That’s a gain of nearly 8%. All gone now.

Here at Kamaaina Loan, we feel like we imagine a deer feels in the headlights — transfixed but helpless to do anything about it. For our Maui pawn shop, transactions in fractions of ounces are our bread and butter. A  purchase or sale of 10 ounces would be a red letter day.

We, of course, like to see the price of gold go up. We have a sizable amount of gold in our jewelry store at 98 North Market St., so rising prices make that more valuable. Even more important, if gold goes up, we can lend our pawn customers more, earning more interest for us.

If the smart money is right, though, the trend is not in our favor. Goldman Sachs and Societe General, big playas, are looking for an average 2014 price as low as $1225. Bloomberg News reports:

Bullion, which slid last year by the most since 1981 as some investors lost faith in the metal as a store of value, rebounded 9 percent in 2014 as the global expansion faltered and tensions escalated in Ukraine. Those bullish influences are “transient,” and the U.S. economy will recover from a weather-driven slowdown, pushing gold lower, Goldman’s Jeffrey Currie reiterated in a March 20 report.

Since the year is already almost one quarter over, it will take a 6+% decline just to get to $1225. To get to an average of $1225, the bottom price would have to go lower still.

What can we tell you? If you want to sell or pawn your gold jewelry sometime this year, Goldman Sachs thinks you should do it now rather than later.

We have no idea.