This is a sample entry from Kurt Pfafflin’s newsletter, The Gold & Silver Speculator, published on April 10, 2013.
SELL GOLD, SELL GOLD! GOLDMAN SACHS SEES DOWNTURN IN GOLD CYCLE ACCELERATING, SLASHES PRICE ESTIMATES & RECOMMENDS INITIATING NEW SHORT COMEX POSITION. MEANWHILE, BANK OF JAPAN OPENS THE QE MONETARY FLOODGATES SETTING THE COURSE FOR UNPRECEDENTED EASING.
Gold & Silver Bears rejoiced in ecstasy today as Goldman Sachs Commodities Research report torpedoed Gold’s fragile bounce off the $1539 low print last Thursday, shredding -$30 off intraday.
Friday morning’s pathetically weak Non-Farm Payrolls (NFP) shocker caught the Bears off guard, forcing some of them out of their profitable shorts and fueling a $50 short-covering rally that continued through Tuesday’s session, marking a high of $1590 before succumbing to the relentless negativity propagated by the likes of Goldman Sachs and Société Générale among many others.
While the amazing, high-flying S&P zooms to a new, record-setting all-time high, extreme pessimism reigns supreme in the Precious Metals markets. Although the Bulls’ hopes of igniting a larger spike higher have been absolutely crushed (yet again), highly-profitable Bears should have some doubts about how much longer this stranglehold on sentiment and price can last.
Today’s uber-bearish GS commodity research report and short-sell recommendation comes at a very interesting time – just as the desperate Bulls get a bounce off critical well-tested, long-term support and especially when viewed against last week’s Commitment of Traders (COT) reports for the Gold & Silver futures markets (see chart analysis below).
I’ve often wondered whether their analyses would be any different if they were to view the “barbarous relic” as the hard currency and historical store of value it has always been as opposed to a simple commodity that is merely produced and consumed? I guess we’ll never know?
Based on their research, GS analysts – in their infinite wisdom – apparently believe the recent downturn in the Gold cycle is accelerating so they are slashing their near-term and long-term gold price forecasts and positioning themselves on the short side of the market.
They are also recommending initiating new COMEX futures short positions to their clients (with June Gold trading $1560, they’re shooting for a -$120 drop down to $1450 with a stop-loss $90 higher at $1650).
So, why is GS so bearish on the yellow metal? Their justification for such extreme negativity towards Gold appears to be primarily predicated upon GS economists’ expectation that a substantial acceleration in US economic growth later this year will support higher real rates and ultimately destroy demand for Gold.
Ahem. Maybe its just me but Friday’s miserable NFP reading of only +88K jobs added versus the lowest estimate of +200K just doesn’t seem to be the type of positive acceleration they’re looking for? Let me go on record to say that I stand in complete disagreement with their line of thinking.
Here are Goldman’s JUST REDUCED USD-denominated Gold price forecasts (take them for whatever they’re worth to you. Or don’t take them at all.)
2013 YEAR END: GOLD $1,450 (-$110 FROM CURRENT PRICE $1560 BASIS JUNE)
2014 YEAR END: GOLD $1,270 (-$290 FROM CURRENT PRICE $1560 BASIS JUNE)
Meanwhile, in an effort to reach their 2% inflation mandate or target within the next 2 years, the Bank of Japan announced shockingly aggressive, bold, new quantitative and qualitative monetary easing programs.
Parroting last summer’s quote from ECB’s Super Mario, bureaucrats and politicians in the Land of The Rising Sun will do “whatever it takes” as they implement what they believe to be the ultimate solution to finally rid their economy of deflationary forces.
Japan has embarked upon what has been called the largest sovereign balance sheet expansion known to man – far greater than the US Fed’s QE measures percentage wise. The BOJ is now set to unleash an unprecedented flood of liquidity into world markets. Will any of that eventually find its way into the Gold & Silver markets? Only time will tell…
Please refer to the charts below for further commentary and analysis…
*Look for email alerts/market updates should conditions warrant or if/when environment allows
JUNE GOLD (GCM3) – WEEKLY CHART
MAY SILVER (SIK3) – WEEKLY CHART
“Buy when there’s blood in the streets, even if the blood is your own.”
– Baron Rothschild (1871)
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This is a sample of the analysis from my weekly precious metals market commentary newsletter, The Gold & Silver Speculator. Register now to receive the most relevant investment information and trading tools to participate in the gold and silver markets!