Posted on 03/21/2013 11:36:46 AM PDT by blam
SocGen: Gold Is Going To Tank To $1,375 This Year
Mamta Badkar
March 21, 2013
Over the last 20-years, gold has shown zero correlation with stocks and bonds, and had therefore become a favorite in terms of diversifying the portfolio, according to Societe Generale.
But SocGen analysts Alain Bokobza and Roland Kaloyan think "The Gold Rush Is Over".
Gold is well off it's 52-week high of $1,802. And the analysts expects gold to fall 15 percent from its spot price to $1,375 per ounce by year end. This is more bearish than the consensus view which is 30 percent above SocGen's, with a forecast of $1,750 per ounce.
In a report published earlier this year, the analysts wrote that they expect gold prices to fall for four key reasons.
1. Stronger U.S. dollar - Gold prices have shown a 75 percent correlation with the USD trade-weighted index. And SocGen analysts expect the dollar to strengthen by the end of the year on stronger housing data, job data, and recent talk about winding down QE even though there is no specific date yet.
2. Higher real interest rates - "There are many “empty” bubbles in the top left area of the chart but that other areas are full of “blue” bubbles (i.e. rising Gold prices). So during periods of negative real rates OR US Dollar weakening, Gold prices have systematically increased."
Societe Generale
3. Outflows from precious metal Exchange traded products (ETP) - In recent months gold inflows began to decelerate and in January we saw outflows.
Societe Generale
4. Hedge funds are reducing their net long positions - "Even if hedge fund managers remain net long on Gold, they have significantly reduced their positions since last summer."
(Excerpt) Read more at businessinsider.com ...
PING
Yeah, so you better sell it NOW, QUICK! [to us]
Fools and their real money are soon parted.
LOL! Do they take into account ‘SHTF’ might be coming? Do they take into account the dollar could become worthless?
it’s very simple.
the dollar is subject to devaluing and dilution
has the administration done anything to strengthen the dollar?
no.
has the administration cranked up the printing press?
yes.
therefore, the value of the dollar will continue to get smaller.
in the US, gold is measured in dollars. therefore, gold will continue to receive upward pressure in terms of dollars.
if anyone is saying gold is going to tank, they are obviously trying to buy in at a lower price.
Bunk. The Fed keeps printing while Barnacles keeps selling “accommodation”.
The dollar is currently worth 1/1614th oz of gold.
That’d be awesome if gold went down. I’d be interested in buying a lot more of it were it more affordable.
Investors (especially institutional investors) aren’t Scrooge McDuck sitting on a big pile of gold coins purely as something to look at. A lot of investors have a large profit sitting in their vaults that they will want sell in order to reap the profit thus far. Institutional investors especially, have customers to answer to who expect a return on their investments with the institution. Gold sitting in a vault doesn’t pay the bills or put food on the table, at some point, especially if everything else is going to crap economically, it will be sold.
The guy down the road sitting on some coins for a SHTF situation doesn’t have enough to move the price if he sells. It is all about institutions who buy and sell billions of dollars worth at a time and play the price swings.
I don’t know if it will go down as much as stated in this article, but it is logical to assume there will be some price swings as it changes hands.
There is some supply and demand factor,
but for the most part, think of the value of gold as a constant,
and its “price” is just a reflection in the value of the dollar.
Historically, an oz of gold would get you a nice suit of clothes and a contemporary personal defense weapon. It still does.
Also, if you understand that the dollar’s days are short,
you “buy” gold as wealth insurance.
No, you can’t eat it; you can’t really spend it either.
But it’s insurance to be changed into whatever passes for currency “after”.
If you need a metal that will be used for currency until that new system is in place, that would be silver.
Silver is money, gold is insurance.
I own metals for disaster hedge.
This analysis doesn’t seem to consider disaster a possibility.
Remember, the more they tell us that everything is good, getting better & nothing to worry about while the real numbers tank........start getting nervous. Tipping point alert.
Oh, Nos! At a lousy $1,357.00/oz I’ll only have quadrupled my original investment.
Damn. Just, Damn. *SMIRK*
“Silver is money, gold is insurance.”
Agreed.
A friend once said to me:
Gold is what you use when you want to buy your neighbor’s house, car, or daughter. But silver is what you use to buy groceries, fuel, and to make other small purchases. Anyone who tries to buy a bag of groceries with gold will likely just see a smiling grocer saying, “Thank you!” when you over-pay for your food.
“...dollar could become worthless?”
Could?
That thing is shrinking as fast as the Obamadork’s nose is growing.
If anyone is saying gold is going to soar, they're obviously trying to get others to buy in so their own gold will go up in price.
Exactly!
Everytime the Dow goes up, gold and silver go down .. however, if we have what is expected to be a HUGE DROP in the Dow, that means that gold and silver will skyrocket.
I’ve read many, many research pieces on this, and the pattern is clear.
Just sayin’.. Gold going from 1800 to 1200 is still “ahead of the game” versus having $1800 paper dollars which become $0
If interest rates begin to move up significantly, gold will soar. Here’s why. The only thing keeping the economies of the world moving at this point is cheap money. If that goes away, the economies will begin to tank. Money seeking safety will go to hard assets like gold. This will begin a cascade, IMHO.
Can’t figure out if you’re misstating your hypothesis or you’re just messin’ with us...
a devalued dollar would cause the stock market to go up AND gold to go up.
An inverse relationship would mean that the dollar value was pretty constant and supply and demand were taking over, where more dollars are chasing one OR the other.
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