The gold price got close to $1,200 yesterday before recovering a little to the low $1,220s, but the pressure still seems to be downwards with bank analysts predicting it will fall yet further.
LONDON (MINEWEB) – As I write the gold price is sitting at around $1,225, but it fell at one time yesterday to around $1,206 and it may not take much to drive it down below the key $1,200 psychological support level. If it breaches this level the price could well fall sharply further with computer based stop loss sales coming in strongly. The fall could then become something of a rout.
And with gold bears like Jeffrey Currie at Goldman Sachs getting in there keen to generate further downwards momentum so his end- year $1,050 gold price might actually come about, then who’s to say it won’t freefall to $1,100 or below. Currie and Goldman Sachs will doubtless have their avid followers, particularly within the financial community – after all Goldman could be perhaps described as the most successful investment bank of the past generation. True, some of its tactics for achieving this may not be seen as without moral flaws, but then this is something which could be applied to almost any investment bank – not specifically to Goldman.
To many the dark art of using and manipulating money (real or imaginary) just to make more money and the wealthy even wealthier, may well be part of the capitalist ethos but it is not one which sits well with the silent majority, even though they may express allegiance to capitalism.
It is an excess of this greed by the ultra rich, which begets socialism (with all its flaws) and revolution as the masses rise up against the wealthiest section of the community. It may be schadenfreude which is the driving force here – and the wealthy sector – the establishment – tends to hold the power advantages through control of the forces of law and order and the military but, as history shows, this advantage does not always prevail.
But I digress. As someone who believes in the long term future of gold as an ultimate wealth protector, not necessarily for making money per se, I do find Currie and his ilke’s predictions somewhat discouraging, although I do not see his scenario as having long term legs if it actually comes about. All these things tend to move in cycles and almost as sure as gold has been declining in terms of its dollar value for most of the past three years, it will recover again when the cycle turns. It’s just a question of when this will happen.
But, of course, Currie is not alone in his views – they are shared by other heavy hitters in the banking community, which also has the financial muscle make the forecasts come about if it suits them. As we noted in yesterday’s article linked above, SocGen’s Michael Haigh contemplates prices at $1,150 in the third quarter next year, while Citigroup has also just lowered its forecast for next year amid expectations of U.S. rate increases, while the “risk- related source of support has been diminished.” The bank thus cut its outlook to $1,225 from $1,365.
UBS is another which has reduced its three-month outlook too by 7.7% to $1,200.
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