2-Gold prices steamrolling toward $2,000: Goldman Sachs
Gold prices are finally catching a long-awaited bid as inflation fears have subsided, and Goldman Sachs analyst Mikhail Sprogis said the upside move is only just beginning.
Sprogis reiterated his $2,000 an ounce price target on gold prices in a new research note this week, voicing optimism amid the backup in Treasury yields and easing inflation concerns.
“As a result of the liquidation, gold is now again pricing a Goldilocks scenario of moderate inflation and continued global recovery and is thus trading at a large discount to the current real rate. We estimate that the current gold price is consistent with a real rate of 0.1% vs. the -0.87% that is currently priced by the market. In our base case that the global recovery continues uninterrupted and inflation remains subdued, we expect this discount to persist and see just modest upside to gold, driven by only a small increase in real rates and a continued improvement in EM wealth,” Sprogis contends.- Source: Yahoo
Takeaway 1: Buy Gold!
Takeaway 2: Goldman needs someone to hold their bags
Net-Net: It’s marketing. Why recommend gold ‘after inflation peaked’? Sometimes they say it to get you to buy, sometimes they say it to get you to buy from them. You can’t know. But when they want to be taken seriously, they trot out the Currie. This is just space filler like an advertisement. Same firm will tell you to buy bitcoin in a different part of the world if you are long gold. See next story
3-Gold is not the optimal store of value: Goldman Sachs
Goldman Sachs investment strategy group released a report titled “Digital Assets: beauty is not in the eye of the beholder,” in which the investment banking giant wrote about the world of cryptocurrencies.
The report stated that the purpose of the insight was to “address our clients’ questions" by analyzing the desirability, even viability, of cryptocurrencies as an investment asset class and examining a possible role for cryptocurrencies in our clients’ customized strategic asset allocation process, within the framework of our investment philosophy.”
A section of the report focused on hedge inflation or deflation as a store of value with Goldman Sachs stating that Gold is not an optimal store of value. Gold was introduced into the analysis because people have claimed Bitcoin to be the “Digital Gold.”
Goldman Sachs looked at the performance of Gold to shows that even if Bitcoin is supposedly Digital Gold, the commodity itself (Gold) has not been an effective hedge against inflation as most people think it has been.
The report went further to state that the only asset class that hedges inflation on a consistent and reliable basis is US equities. US equities have outperformed inflation 100% of the time over any 19-year window. Gold outperforms inflation only about 50% of the time over a 19-year window. It concluded that owning US equities is a better long-term inflation hedge. Source: Nairametrics