NEW YORK (TheStreet) -- It has been a terrible year for gold. The two biggest mining companies, Goldcorp (GG) and Barrick Gold (ABX), and the SPDR Gold Shares ETF (GLD), are all down by double digits. By contrast, it was a bull market year for stocks, with the Dow Jones Industrial Average (DIA) rising more than 25% for 2013.
Based on recent economic data and financial indicators, 2014 looks to be more of the same for those choosing to speculate on the yellow metal rather than invest in equities.
Gold has posted its worst year since 1981. In general, gold performs best as a safe haven asset when economic times are at their worst. When investors lose confidence in the value of paper money, many buy gold. That drives up the price.
But that has not been the case for 2013. There are simply too many undeniable signs that the global economy is improving, with the U.S. and China, the two biggest economic powers, leading the recovery from the Great Recession
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The improving economies around the world will not lead to higher prices for gold.
In fact, gold's appeal has never been as an investment. It has always been a speculative buy, as there is virtually no industrial usage. Supply from economic forces will never drive up the price of gold as it may for oil or copper. Those owning gold have to hope that another buyer is willing to pay a higher price. This is what is known as "the greater fool theory."
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