Goldman Sachs and other big banks are setting their sights on a bull run for gold in lieu of presently depressed prices.
Commodities analysts at Goldman Sachs are telling traders to buy gold now because of the sharp gold-price decline in the wake of declining U.S. real rates
Those analysts predict that gold will jump to $1,785 an ounce within the next three months, $1,840 in six, and $1,940 within the year.
Moreover, Sachs believes that the Fed will follow through with further easing which will push the “market’s expectations of real rates back down near 0 basis points and gold prices back to our 6 month forecast.”
One mining CEO, Malcom Norris, and explorer Solomon Gold, told CNBC that gold could spike all the way up to $2,000 per ounce!
Nonetheless, recent economic data was a bit stronger than originally anticipated which could put added pressure on gold prices. Economic improvement and the liquidity that has been injected into Europe’s banks have contributed to the slumping gold prices.
Interestingly enough, many of those big banks may start making some sizable gold purchases again.
CNBC reports on why this is beneficial for the banks:
“By holding more gold central banks are insuring themselves against their own profligacy. They print money. The price of gold goes up. And if they hold a lot of the stuff in their vaults, they are the big winners from the rise in price,” Matthew Lynn, founder of Strategy Economics, wrote in a research note.
“If you can pull it off – and there isn’t anything to stop you – that sounds like an easy way to make a living.”
As far as individual investors are concerned, Macquarie Private Wealth is urging you all to buy on this dip. Despite the gold’s recent downward pull, are are the five reasons Macquaire says you should get gold now:
- Sentiment towards gold has no[w] reached “extreme pessimism” levels.
- March is seasonally the weakest month for gold.
- Excess slack in the US economy will prompt the Fed to say on hold until 2014, as indicated, keeping short rates low.
- The extent of the long-term rate rise is over. The Fed will ease some more.
- Sovereign risk is not over
- Wealthwire-Brittany Stepniak-March 29, 2012