Executive Edge

Has the Fed squashed gold bugs for good?

Jeff Brown, Special to CNBC.com

Recapping the day's news and newsmakers through the lens of CNBC.


The true gold bug never loses faith. High prices are vindication. Falling ones? Well, they provide a buying opportunity.

But ordinary investors dread years like this one. Gold is down about 27 percent, on track for its worst year in two decades. Now some analysts believe the start of Fed tapering will make things even worse, because reduced liquidity from the central bank reduces the risk of inflation. Inflation protection is one of the chief goals of gold hoarders. An expected strengthening in the U.S. dollar could also hurt, since dollar and gold prices typically move in opposite directions. Some gold experts look for a silver lining, arguing that recent selling may simply reflect a tax motive, as investors look to realize losses to offset gains on stocks.


"The reasons to hold gold as a hedge against inflation don't seem to be there. ... You should have your money elsewhere."—Daniel Morgan, global commodities analyst at UBS

The anti-taper tape


The Fed may think things are getting better, but lots of U.S. workers surely feel otherwise. New unemployment claims jumped to a nine-month high, rising by 10,000 to 379,000. Economists had forecast 334,000.

And in a second bit of gloomy news, the National Association of Realtors said sales of previously owned homes fell by 4.3 percent in November to the lowest level in nearly a year. Higher mortgage rates and home prices appear to be the causes, the NAR said. The bright spot, if you can call it that, is that home price gains seem to be slowing.


"It is a clear loss in momentum for home sales."—NAR economist Lawrence Yun



This is something to make any merchant shudder: a breach of customer credit cards that could send shoppers to competitors. And it happened during the biggest shopping season of the year. Yikes!

Target says it suffered a breach of 40 million credit and debit card accounts between November 27 and December 15, and the chain urges anyone who shopped at its stores during that period to check for unauthorized charges. With most people still to do the bulk of their holiday shopping, experts wonder how many will steer clear of Target due to this issue. Similar problems at other retailers, however, have not typically led to wholesale customer desertion.


"I'm usually in Target once a week, but around this time of year? I've been there three times this week. ... I probably won't go there for a few weeks until they figure this out."—Target customer Helen Lane of Newport News, Va.



Shares in Darden Restaurants today after the restaurant company announced a 41 percent drop in quarterly profit and said it would sell or spin off its Red Lobster chain, which suffered a 4.5 percent decline in same-store sales. Among its problems, Red Lobster is hit by a spike in shrimp prices.

That chain and Darden's Olive Garden have suffered since the Great Recession as customers opt for cheaper competitors with faster service, such as Chipotle. One of Darden's big shareholders, activist investor Barington Capital Group, has been pushing the company to split in two, separating those under-performing chains from the faster-growing properties: LongHorn Steakhouse, Seasons 52, Capital Grille, Yard House, Eddie V's and Bahama Breeze restaurants.


"If shrimp prices continue to climb, they're going to have to figure out how to offset it with other cost cuts, or shift the menu away from shrimp, which would be tough to do given you're a seafood place."—Peter Saleh, a senior research analyst at Telsey Advisory Group

By Jeff Brown, special to CNBC.com