Sell-Side Analysts Tripping Over Each Other With Bearish Pronouncements
While
the debt ceiling farce is playing out, a full court press against gold
has become visible in the media (once again), with mainstream sell-side
analysts trying to out-bear each other. Never mind that not one of them
told people to buy gold when the bull market started – in fact, they
were for the most part completely silent until it moved above the $1,500
level, at which time they all turned bullish. Having done their clients
the favor of telling them to buy high, they are now apparently quite
eager to advise them to sell low.
We
have previously remarked that rising gold prices are not in the
interest of the fractionally reserved banking cartel, which requires
faith in the State's confetti to remain strong. Since rising gold prices
inter alia indicate that this faith is crumbling, both banks and governments have a vested interest in not seeing gold rally.
We
are however not necessarily alleging here that the individual analysts
making these calls are acting in order to defend these vested interests.
Rather, we think most (but not all) of them simply don't understand the
gold market and that their arguments are simply in error. Mind, we have
no opinion on whether their price forecasts will or won't turn
out to be correct, we are just saying that they are throwing darts. If
they turn out to be right, it will be for the wrong reasons.
We will focus on some reasoning that strikes us as especially misguided. Here is the view from Goldman Sachs, apparently seconded by Credit Suisse:
“Gold, set for its first annual loss in 13 years, is a “slam dunk” sell for next year because the U.S. Economy will extend its recovery after lawmakers resolve stalemates over the nation’s budget and debt ceiling, Goldman Sachs Group Inc.’s Jeffrey Currie said.The bank has a target for gold prices next year at $1,050 an ounce, Currie, Goldman Sachs’s head of commodities research, said today on a panel in London. The precious metal has tumbled 21 percent this year to $1,322.28 an ounce on speculation that the Federal Reserve would reduce its $85 billion monthly bond-buying program, known as quantitative easing, as the economy recovers. Lawmakers probably will reach an agreement on raising the debt ceiling before the Oct. 17 deadline, Currie said.“Once we get past this stalemate in Washington, precious metals are a slam dunk sell at that point,” Currie said. “You have to argue that with significant recovery in the U.S., tapering of QE should put downward pressure on gold prices.”Currie and Ric Deverell, the head of commodities research at Credit Suisse AG, both said on a panel at the Commodities Week conference in London today that selling gold is their top recommendation for trading in raw materials in the next year.”
(emphasis added)
We
should perhaps point out the glaringly obvious here because it seems
Mr. Currie hasn't noticed: all that 'speculation' about the 'end of QE'
and even a mere 'tapering' has so far turned out to be 100% wrong. It
was not possible to make a more incorrect forecast on this issue than
Goldman Sachs and other mainstream banks have so far made. We would
remind here that the Fed has been mumbling about 'exit strategies' since
2009 and has instead vastly increased its 'QE' programs.
Meanwhile, since 'QE to infinity' has so far not helped gold to rally,
why should a slight deceleration thereof mean anything?
As to the 'US recovery' – it remains a sorry sight indeed.
US real GDP per capita, 9 and 5 year change rate, via our friend BC – click to enlarge.
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