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JPM Increases Gold Price Target, Upgrades Precious Metal Miners, See 25% Probability Of $1,500 Gold
What's wrong with this picture? The bank that is widely seen as the biggest manipulator of commodity prices and allegedly has the single biggest precious metal short exposure on the futures market, is out with a note today that recommend the following to its clients:"It’s difficult to buy gold after its strength and close to record highs. However, we feel it’s more difficult not to have a gold position in these highly uncertain times. Even at these levels we’d encourage investors who haven’t yet entered the gold sector to open a starter position." So JPM telling clients to go nuts in gold? This can only mean that either the bank is looking to start unwinding its gold shorts, or is preparing for the biggest crackdown on gold's record price in history. JPM also notes: "We’ve lifted the weighted average gold price we use for target price estimates by $52.50/oz to $1,192.50/oz." Furthermore the bank now sees a 25% (we wonder just how they quantified this) chance that gold will hit $1,500. If JPM is halfway as competent as Goldman at doing the opposite of what it recommends (yesterday's downgrade by the squid of the EURUSD comes to mind), this can only mean that gold is likely about to get annihilated.
Some key highlights from the report:
We use a weighted average gold price in our Black Scholes estimate for target prices. Our method is based off the JPM long-term forecast, but we introduce other scenarios to capture the potential upside that could come from a second leg of the financial crisis and or the shortage of new gold deposits.
Gold prices recently moved up to a new all-time record and with the European debt crisis still unresolved could remain elevated for some time. Gold has been strong in most currencies, showing that this is a real demand event rather than the impact of dollar weakness.
The chart below shows that recent strength has been in the metal and not simply a result of currency impacts.
Of note. While gold prices have risen in this new treatment, base metal prices have slipped, and this has put a little downward pressure on producers with meaningful by-product revenues.
Full report.
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But their higher % forecast is for $950/oz.
Yes, im contrarian on gold:)
Looks like they are talking it down to me. A little too much "lead line spin".
So really they seem to be pumping mining stocks:
"The biggest changes to our target prices are with Agnico (AEM), Goldcorp (GG), and Barrick (ABX) which rise 25%, 19%, and 16%, respectively."
Barrick we all know were massive offenders of abusive hedge books. Not sure on the other ones.
Gold as a safe haven has some merit in the long term; however, since deflation is much more likely in the near term than inflation, gold as an inflation hedge has no merit currently. Until deleverging reaches stasis, gold value has more probability of decreasing than increasing. Just my 0.02 cents.
Deflation will lead to a currency crisis because the dollar is backed by debt. Keep your "0.02 cents" (are you dealing in haypennies?).
I agree. I'm a follower of FOFOA:
The Old Hyperinflation Question
The haypenny was 0.5 cent -- and the mill (used during the '30s) was 0.1 cent -- either one would be an overpayment.
+ $1220
Gold can appreciate during deflation... we do not need inflation for gold to appreciate, we merely need the fear of inflation. Needless to say, the deeper we fall, potentially, the more likely it is for us to hit the panic (print) button. By the time hyperinflation hits, it will be too late to purchase your gold as much of the inflation will already be priced in (through fears along the way).
Further, the ancillary and compounding issues are that we're contemporaneously embattled in currency crises. Conceptually, gold will decrease in price in dollars so long as we're in a deflationary environment and the dollar is the go-to currency standard. In other words, dollars will appreciate faster than gold in dollars. However, the recent trend seems to be that the euro and other panic money is not going solely to the usual suspects (dollar+u.s. treasuries), but rather also to gold. Just like each time a bell rings an angel gets its wings, each time a euro country fails, shit ass currency gets traded for gold (including panic buying).
+1 spot on.
Take a look at this graph:
http://2.bp.blogspot.com/_nSTO-vZpSgc/RnwyB3vw3NI/AAAAAAAAA5M/eAJ-zexw-1...
Self-explanatory.
Very interesting. Should we be led to believe that spike in the purchasing power of gold could occur again? I am shocked at how little the dollar is worth compared to gold in terms of purchasing power. Interesting indeed.
http://uk.reuters.com/article/idUKNOA03022020071210
"prices expected to average $815 an ounce and $1,475 an ounce for 2008"
Right before the gold and credit crunch started. Actually gold traded up to 1000 right after this than crumbled to the high 600s with all other asset classes.
http://www.forbes.com/2008/03/13/gold-record-closer-markets-currency-cx_...
"I believe gold is going to go higher," said JPMorgan Chase analyst John Bridges. "[Now that we have gotten] above 1000, we are going to get a whole lot of momentum driven investors who are going to drive the price higher."
He nailed the top movement perfectly, if you betted the opposite.
We encourage all of our clients to buy physical gold and to deposit it in our vaults, on an unallocated basis, for safe keeping...
EXACTLY.
They need some clients to provide money for them to cover their gold shorts, so they can default, go bankrupt, and disappear to South America, where fascists go to retire.
... Any relation to Oswald?
I welcome all of the above, it will provide my parents a great entry point, they're still terrified to jump in at $1200+. Hmmmm...perhaps they need a Gordon/Chumba "GOLD BITCHEZ!!!" beatdown...
My feelings exactly -- if I can actually BUY more PHYSICAL on a dip that lasts a few days, I will -- just because sooner (rather than later) everyone I care about is going to be dead busted.
Right now I'm the "tin hat crazy" liquidating my paper promises for real assets (metals, backyard well, vegitable garden etc.) -- later, the "crazy" maybe not so much.
This can only mean that...the bank is...preparing for the biggest crackdown on gold's record price in history....this can only mean that gold is likely about to get annihilated.
Hedge with gold put options BITCHEZ!!
Gold's bull market is ready to run like a freight train right up the asshole of anyone standing in the way...
So ask yourself before going short the yellow shiny, do I want my asshole bent over in front of a freight train?
Market Pulse
June 10, 2010, 8:59 a.m. EDT
China says gold not suitable for forex holdings Explore related topicsBy Chris Oliver
HONG KONG (MarketWatch) -- China's State Administration of Foreign Exchange, the regulator which oversees the nation's nearly $2.5 trillion foreign exchange stockpile, said Thursday that the gold market is too small, illiquid and volatile to be considered suitable for asset allocation, according to a Reuters report. The Reuters story cited comments that appeared in the regulator's annual forex management report for 2009, which was published on its website Thursday. Safe did not give an update on its gold holdings, which rose to 1,054 tons last year from 600 tons in 2003, as a result of purchases of local production. Safe also said in the annual report that it plans to improve the diverisfication strategy for the management of China's reserves, including the range of asset classes it believes are suitable. It did not provide details.
monmick,
As they stealthily aquire all they can get their hands on.....Russia also...........their more OPEN about it though.
We all know how this party ends, knock it down to $800.00, within 18-24mos, it will be 4-5x's that.
To quote a WAY overly used phrase...........
This (fill in the blank) is totally UNSUSTAINABLE.
Know when to hold, and when FOLD.......with our fiscal debt...yeah, sell your PM's.
A noted Bear, in an article gave his reccomendations(in current economy), and had a 40-50% of total net worth, in Gold and Gold stocks.
That's a lot for a noted Bear to say.
To anyone out there believes this (that includes you Jon Nadler), I have some valuable farmland in Mexico to sell you, I will send all the information to you after you send me a modest down payment with a self-addressed stamped envelope to...
agree completely, let them knock it to 1000, am telling all my relatives to put money in gold and they will listen this time.
go JP go!
Set up for the big sag and liquidation? Nothing surprises me anymore.
+1, SSDD
Civil suit coming in the next few days agaisnt them for manipulatio, this time they're right only because they're gonna be out of the market and can't rig anymore due to the lawsuit... Got any gold yet??
yep - got all sorts of that shit - stack that shit in the basement vault next to potable water, guns and ammunition, cases of fine wine, a humidor full of choice cigars, and a giant pile of good porn. I also hide my silver and platinum and palladium down there... anyone comes looking for it I'm going to smack their fuckin ass cheeks right before I shoot them
Yours Truly,
Nathan Wind
Add some chocolate to the pile. And coffee beans. Having lived in Canada too long, I'm stocking up on Earl Grey, aka Lord Stanley (Cup). Go Canucks, next year.
my most paranoid thinking about this tells me that one of these banks will be chosen as the "bad bank" that is not TBTF, will not be bailed out, and it will be the one that is short all of the paper gold and silver... leaving all of the ETFs as the counterparties left with worthless contracts.
Interesting, the banks will sacrifice one of their own. I'm sure all those at the top of the "bad bank" will be well compensated.
You probably mean VERY well compensated...
Oh hell yes they will be.
They'll also get BK bonuses because their knowledge is "essential" to a winddown. Just like AIG. Can't afford to lose that talent.
Like if Exxon gave the Valdez captain a huge bonus and retention pay because he knew the ship he just wrecked better than anyone else.
The executives will be taken care of...rank and file? Fuck you. The executives are already taking care of each other.
How many boards do you suppose BOTH Dimon and Blankfein sit on?
Sure, how would you think they will exit shorts, of course they will do exactly what you said. There is no other alternative, they are not planning to pay, that's why they are shorting with all the leverage they can. Its not a fair market.
That is another concept I was introduced to by the goldbugs: that a great pile of the obligations that the banking cartel wanted to be rid of would be stuffed into one bank which would then be allowed to fail, taking all those undesirable obligations with it. They were speculating then (about three years ago) that it would be JPM. Didn't JPM inherit a huge silver short position from Bear?
I keep wondering if the Fed will be the puppy. Load it up with all the bad paper, close down, and reopen under a new name with new fiat notes.
JPM is trying their best to kill gold price but so far 10 years average Gold price tell it all crystal clear, They are losing the battle.
Yes they can try whatever they want but it will look like SNB intervention to Euro, it gives more chance for others to buy more Gold.
My estimate is they are going to unwind their shorts.
POG is up but gold-investor sentiment is poor.
On a psychological level the manipulation works well.
POG can't be killed, the freakin supply peaked 10 years ago. Demand has stayed but supply is dropping.
Permanently high price is in store. So what if all the slum indians cannot afford at 1200? There isn't the supply for them anyhow at a price they would pay. As commodities go into supply decline, the weaker hands drop OUT of the bidding entirely.
JPM is trying their best to kill gold price but so far 10 years average Gold price tell it all crystal clear, They are losing the battle.
Yes, but they've slowed the Gold and Silver trains down. 15% a year or so, but it should be rising 50% or more.
My take on the JPM report - the analysis is "kindergardenish" terrible. It's designed to confuse and be used as a court defense - "See your Honor we weren't biased, we said it could go UP or DOWN".
"We use a weighted average gold price in our Black Scholes estimate for target prices."
Apparently, "Merton & Scholes are the two clowns that received this prize (Nobel) from the Riksbank in 1997, for their work in their Options Pricing Modelling. They ended up creating a Hedge Fund, which applied their theories, called Long Term Capital Management. I'm sure those on this email list know what Long Term Capital Management
was. This fund blew up in 1998, losing something on the order of US$200 billion, causing a massive crisis, which was papered over."
You can read the entire article at www.goldstandardinstitute.com/sections/articles/riksbanks_folly.html
Actually, their options pricing model works. It's the rest of their capital asset pricing model with is a load of junk.
No word of bullion shortage?!
The buying recommendation implies to buy miners and reads almost like Greenspeak.
If a sell-off is coming, miners might go down with the market while bullion might do well as more people realize that real metal does not have counterparty risk.
I gather recommending one course of action to clients when you intend (or know others intend) to take the opposite would be a very clear case of criminal deception as well as market manipulation.
People from GS and JPM AND HSCB would be going to jail if they did something like that so I am assuming they are not that stupid.
The regulators would be all over them in a shot....oh I forgot the regulators are busy at the moment with their arses full of bankster semen.
By their fruit, ye shall know them. Their words have no meaning.
So they say Gold is more likely to go down to $950 rather than up to $1500?
Paper gold maybe, but not the Right Stuff.
Silver is pretty resilient (for now) this morning in the face of this concerted attack on gold. As Ben, I am somewhat mystified by this...
The criminal Fed is busy this moring..have to ge the markets up 5% nobody will think that strange will they? The DOW will be 100,000 at the same time there are 100 million Americans with food stamps. But that is ok, the DOW shows all is well.
Wonder if the Fed, banksters and regulators all get together every month for a good round of self sucking. They would be of greater benefit to the country if they started making tranny porn.
CNBC Street Poll:
http://www.cnbc.com/id/37600124
Are you better off invested in gold or the S&P over the next three months?
I'd bet on gold
I'd bet on the S&Pif equity markets really tank at some point this summer / fall, liquidation should drive gold and silver way down.. JPM is just trying to find someone willing to take the other side of the trade..
Bernanke makes this “I don’t understand the price action in Gold” statement and and then his pet bank comes out with this report that increases Gold Price Target, and sees 25% Probability Of $1,500 Gold. Now these may seem two events may appear to have no bearing on each other, but like suggested a few days back, there is something afoot with just not sure what it is... I might be wrong, but I’m sure informed audience here might have an answer, more than JPM declaring war on gold under the directive of Ben B.. IB
The EURO breakout I suggested yesterday, has made its move ...
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Gold at $1500 does not bode well for the Euro...
Well the quantification means crap anyways. It either will hit it, or not. 0 or 1. But I do also wonder how they are quantifying it, what variables/weighting, etc.
25 percent probability means crap.
I believe it will. When is something else.
JPM is a stooge for the US “Government.” A sell of is fine with me. I take delivery at the paper price. The slight downturn here is that idiot Bernanke showing his displeasure at being embarrassed at the Congressional hearings – “Bernanke Puzzled by Gold Rally” WSJ http://blogs.wsj.com/economics/2010/06/09/bernanke-puzzled-by-gold-rally/
Interesting gold news:
Sprott Signs Resource Sector Lending Deal With Quest Capital:
http://www.reuters.com/article/idUSN1021494920100610
(this is called merchant banking)
Notice they didn't say buy silver - means silver will be higher after this month's options expirations.
***
Tyler if you catch a time window of say 15 min, check out what is happening with BBVA in regards with M&A activity. It is as if they are trying to buy something, anything, that would facilitate the access to commercial paper market.
I think SIHTF here, although the spread has tighten in both main and sub debt.
So make of that what you wish, but something smells bad here.