Goldman Sachs is one of the most venerated investment banks in the United States and it is buying gold.
Posted by Adam King on November 14, 2011
Goldman Buying Gold
November 14, 2011 – Goldman Sachs is one of the most venerated investment banks in the United States and it is buying gold. Love them or hate them, Goldman rules the roost. News has just come out revealing how bullish Goldman is on Gold. The bank is not only buying gold and advising its clients to buy gold, it is projecting as much as an 11% increase in price next year and its call options are at $2,000/ounce.
This is even more significant when compared with the current spot price of $1,778, indicating Goldman’s commitment to gold for the next twelve to sixteen months. After a three week rise in the price of gold and a 1.8% gain in the last week, Goldman’s position looks to be a good one.
“We expect gold prices to continue to climb in 2011 given the current low level of US real interest rates,” Goldman Sachs told its clients. “Consequently, we recommend near-dated consumer hedges in gold through 2012.” Goldman’s recommendation for a long gold position extends through 2011 and 2012 with expectations for the price to rise the next month into December.
While Goldman cites the current low level of real US interest rates as the reason for its recommendation, it is generally acknowledged in the market that the current European debt crisis has a real time influence on the price of gold. How the crisis in Europe will pan out and in what time frame, no one knows surely, but interest rates in the US are very sure indicators of what to expect in the next months.
Goldman is not alone in its prediction, either, as Credit Suisse citing negative real interest rates as the “key driver” for gold to climb over $1,800.
Buying gold is not only a safe bet but a smart bet in this economy and the biggest banks are now advocating it to their customers. Up 25% year to date in US dollars, buying gold is the safest and sanest option available right now. And if the largest and best performing banks are right in their outlooks, it will be for a long time.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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