Gold News

Buying Gold "A Bet Against the US Economy"

Buying gold losing urgency say analysts, as Goldman Sachs tips short sale...
 
BUYING GOLD is essentially a bet against the US economy continuing to recover, says analysis from the head of commodities research at investment bank Goldman Sachs, Jeffrey Currie.
 
"Our view really is driven by the expectation of the US economy reaching escape velocity," he told CNBC on Monday, again recommending investors sell instead of buying gold.
 
Because "when you think about a short [sale, profiting from lower prices] on gold, it's essentially just a bet on a substantial recovery in the US economy."
 
Concurring with Currie's view at Goldman Sachs, HSBC Private Bank also said Tuesday that the US economic recovery is set to continue, weakening the case for buying gold in 2014.
 
"Many of gold's supports gradually dissipated throughout [2013]," notes HSBC, pointing to more tapering of the Federal Reserve's quantitative easing program in 2014.
 
"Indeed, growth and monetary policy divergences are like to materialize between the US and the rest of the world, supporting gradual US Dollar strength."
 
While a higher Dollar would be an "added obstacle to higher gold prices," says HSBC, it would also make gold more expensive for consumer in emerging economies, potentially denting demand.
 
French investment and bullion bank Natixis, in its latest 2014 outlook for commodities, says that "as the US economy gradually returns to normal, so US interest rates will continue to rise," reducing appetite for buying gold by worsening the loss of potential income from cash or fixed-income investments.
 
Asked whether a US recovery won't stoke inflation, spurring a return to buying gold by investors. "We're still below trend and growing," says Goldman Sachs' Jeffrey Currie. "Once we get above trend, [only] then you start to get some scarcity in the economy, then you can create inflationary pressures."

See all articles by Gold Bug here.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

scri

Market Fundamentals