Goldman Tells Clients To Start Buying Gold; Raises Price Target By $100

Tyler Durden's picture

Dear gold bulls, we have some terrible news. Goldman has just raised its price target on gold.

Why is this bad news? Because with Goldman's infamous track record of getting every trade recommendation wrong, it likely means that gold will be trading in the triple digits in no time. Recall that just four months ago we rejoiced when the same Goldman went short gold (when it was trading at $1205)...

 

... which facilitated gold's prompt surge to over $1300, forcing Goldman to close out its short at a loss two months later.

As a result when we read just moments ago that the same Jeff Curries has now flip flopped, and is urging Goldman clients to buy gold...

... we are now certain that the next big move will be lower.

This is what Jefferies Currie, who made about 5 appearances on CNBC following his sell gold reco to bash the previous metal before finally getting stopped out at a 7% loss, said in a just released gold urging Goldman clients to start buying gold (we do wonder how many times this newly reborn "gold bull" will be invited to the Comcast subsidiary).

A stronger dollar and lower treasury yields in response to last night’s vote by Britain to leave the EU have driven gold prices higher and industrial commodity prices lower, bringing commodity markets back near levels where they were last week when ‘leave’ was favored in the polls. As the fundamental impact on industrial commodities of a leave vote is expected to be extremely small, this price action is consistent with our view of a stronger dollar putting downward pressure on commodities despite supportive fundamentals in some key markets like energy. In fact, prompt Brent time spreads have tightened modestly in this down move, emphasizing the macro nature of this sell off. Although the forward outlook is more uncertain under a ‘leave’ vote, much of the knee-jerk downside risks have likely been priced in relative to pre-vote expectations of a ‘leave’ outcome, i.e. a c.10% decline in the GBP. Even though much of the direct macro linkages have likely been priced in, second-round spillovers, i.e. other central bank reactions, could pose further downside risks. However, as the spillovers into the US rate markets and the flight-to-safety sentiment are likely to be more persistent, we are raising our gold price targets.

 

In gold, the sharp rise in prices has been entirely consistent with the move in US 10-year treasury yields, as the Fed Funds market has pushed a US rate hike now into 2018. While a leave vote creates upside in gold prices, we believe much of the upside should be in gold denominated in GBP and EUR given the more profound impact that the vote has on Europe. Nonetheless, the spillovers from Europe into the US rate markets does suggest a more sustainable impact on US rate markets as suggested by our rates strategists and accordingly, we are raising our gold price targets to $1300/toz, 1280/toz and $1250/toz on a 3/6/12 month basis from $1200/toz, $1180/toz and $1150/toz respectively. We also upgrade our year average forecasts to $1260/toz, $1261/toz and $1250/toz from $1202/toz, $1150/toz and $1150/toz for 2016/17/18 respectively. However, the ultimate trajectory will depend on the intensity and duration of the uncertainty shock created by the leave outcome and any potential revisions to the US growth outlook, both of which remain highly fluid in the current context.

In other words, "the ultimately trajectory" of the upcoming gold plunge will depend on how long Goldman seeks to offload its own gold to clients, before sending the metal crashing and starting from scratch.

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N0TaREALmerican's picture
N0TaREALmerican (not verified) Jun 24, 2016 11:58 AM

 

Uh oh, that's not good.

BaBaBouy's picture

ANY More Makeup On This Dude and he'd be declarred a fire hazard...

MisterMousePotato's picture

I've spent a lot of time here over the last six years. I'd like to think I've learned a thing or two, too.

 

This means the price of gold is going to go down, right?

SoilMyselfRotten's picture

Im confused. The price is 1320ish. They recommend buying gold to attain a price that is 1.6% less than its current price. That is a bullish forecast how?

zeronetwork's picture

I call this price BS. My Gold price target for 12 months is $ 5000/toz , $7000/toz ans $9000/toz

PP's picture

Shut down your CNBC, flush your TV and  Jeff Curries with the toilet.

Let him go.

bamawatson's picture

he is waiting  in a stall in every bathroom at every rest area on every interstate

American Psycho's picture

Buy gold is translated into, "quick, cover your shorts."  What an asshat

abyssinian's picture

This shit face moron here is a joke! lol how is that short at $1200 going for you! lol 

 

BTW! one of the retards on CNBC "You shouldn't be selling, gather more information, relax....,  But I won't be buying today, will be choppy and more downside to go next week.."

 

Wow, does that make any sense? He is telling everyone not to sell, but he isn't buying today because he thinks more downside next week...? 

mtl4's picture

How about they were never short in the first place, these guys front run constantly so they know what drecition it's going.

Now that they are claiming to go long, be very weary since this will allow them to take profit selling into the upward spike.

thinkmoretalkless's picture

Love gold, hate GS. Hope this isn't a setup Maybe reverse psychology .

El Vaquero's picture

Naw, they're probably doing something like covering their shorts.  Whatever they're doing, they're going to be on the profitable side of this.  Gold probably will go up $100 too.  Then KAWHUMP!  In the shitter.  The asset hitting or at least coming close to their listed target, then taking a dump is classic GS.  

SuperRay's picture

Covering their shorts makes no sense. They'd want the price down, not up. No, only explanation is they want to sell into the rally to dump longs. Good day to take some off the table. Can somebody shove something, anything, up that guys ass. He so deserves it. Except he'd probably love it

goldm3mb3r's picture

Is that the smell of burning shorts I can smell?

El Vaquero's picture

When did Bart Simpson start working for GS?

 

"Ay Caramba!  Eat My Shorts!"

buzzsaw99's picture

thank god he didn't say usa treasurys

Philo Beddoe's picture

No. Those are BAD with all that rate rising that is coming. 

ABG LINE's picture

Oh Shit! Time to SELL!

DCFusor's picture

That was my first thought last night when the spike happened.  Getting the rest of the way out of paper and phys-only from now on.

AustrianJim's picture

What does Dennis Gartman say??

One And Only's picture

I'm waiting for Gartman to be pleasantly long gold in terms of Dong before I sell.

kliguy38's picture

OK then I'm out........

LetThemEatRand's picture

"Why is this bad news? Because with Goldman's infamous track record of getting every trade recommendation wrong...."

I wouldn't say they get every trade recommendation wrong.  It's more like they make certain trade recommendations to the public that they bet against.  It is a perfect example of legal insider trading.

847328_3527's picture

Gold and Swiss franc are probably the two safest bets for the Brits right now. They can buy online at APMEX or many other gold online sources but hopefully they pick a reliable source.

matinee55's picture

I won't do it.  The F's are setting up for a comex naked short which they have done for years

Anopheles's picture

Gold will go down, not up.  Right now there's a lot of "excitement" over what MIGHT happen.  But reality is that nothing will change for the next several years.   

After these short term fears die out, gold will float lower.  

Give gold a couple years, and it will likely be higher, but ONLY if interest rates stay near zero.  If the US raises interest rates, expect gold to drop very substantially from where it is right now.  Will the US interest rates rise in the next couple years?  Not by much. 

Bottom line?  Gold isn't as high as it's going to get, but close, and the longer term potential is lower, not higher.  (Should add, I'm talking about VALUE, not PRICE) 

N0TaREALmerican's picture
N0TaREALmerican (not verified) Anopheles Jun 24, 2016 12:05 PM

 

Deflation...

Anopheles's picture

Deflation is great theory, but doesn't actually occur over a wide part of the economy.  It only occurs in certain sectors. 

Wages and prices tend to be "sticky".   They don't go down.    Look at Greece.  They've been promising austerity (deflation) for the past couple years, and it hasn't happened.   They made token efforts, but in general, wages and benefits didn't drop.  

N0TaREALmerican's picture
N0TaREALmerican (not verified) Anopheles Jun 24, 2016 12:41 PM

 

I meant more along the lines of "asset deflation" as the reason gold would go down?

OverTheHedge's picture

Greek government salaries & pensions cut by 40-60%. As most workers are government workers, I would call that deflationary. It's had a huge affect on the entire economy (stopped it in its tracks), as all that easy money sloshing about buying new homes and barbecued pork has disappeared. Farmers at struggling to sell fresh veg to the population, as cheap pasta is the soup de jour.

Of course, my experience is purely anecdotal; if you have some numbers to back up your statement, I would love to see them.

Anopheles's picture

The greek government TALKED a lot about cutting, but in fact, the cuts they actually made were minor.  They did trim pensions quite a bit, and upped employee contributions. 

The talk and announcements of cutting made it SEEM like they cut a lot, which they didn't in reality. 

Wages (all) in Greece increased 1.3% last year and are expected to increase 2% this year. 

thinkmoretalkless's picture

Well I'm not going to drag the nearby lake to find the gold lost in a recent boating mishap just to take advantage of a short term trading opportunity. I'm a long term investor....albeit for the record not a possessor.

vasallo7g's picture

nothing changes for the next several years

I dont know but its seems to me the US economy is getting worse as we speak, unemployed is the new normal

N0TaREALmerican's picture
N0TaREALmerican (not verified) vasallo7g Jun 24, 2016 12:44 PM

 

Depends how the top 10% make-out.   There's "full employment" there right now.    The bottom 70% have been getting table-scraps for a few generations now.   The real game what happens to the top 10%, they own and operate (manage) Big-Gov and Big-Corp and get most of the benefit from both.  

markar's picture

You will eat your words in due(short) time. US interest rates are a non starter because the can't raise them. In fact watch them go negative before the end of the year. When trade notes and eventually currencies are backed by gold, it will be repriced many multiples higher than the spot price. Its coming.

Anopheles's picture

I won't be eating my words. 

There WILL be a short term spike in gold, triggered by FUD  (Rear, Uncertainty and Doubt).  But that will last for months to a year or so.   The long term trend for gold is down.  Down in value, and slightly in price compared to today.

I can see gold spiking to $1,400, but there's nothing to sustain it there.  FUD only last for so long, then people get used to it, and it becomes the "new normal", and interest in gold does down, along with he price/value. 

That's why we aren't going to see a repeat of $1,800/oz for a very long time. 

Goldennutz's picture

Rear, Uncertainty and Doubt is RUD.

Grandad Grumps's picture

Ummmm, hold on a sec. If equities prices go down, then there will be margin calls and if there are margin calls, then people will be selling gold to cover the margin calls. How long will it last? Dunno ... but apparently Goldman wants its Muppet brigade to buy gold to try to hold up prices for someone.

earleflorida's picture

equities v. gold 

no in between

matermaker's picture

It humors me how so many on ZH are of the attitude that nothing never ever changes.  The status quo is unbeatable while they rail against it.  Increasingly, those on this site are getting it dead wrong.

SuperRay's picture

Well, the status fucking quo changed big time in the UK today. That shitbag Cameron is out and the EU is effectively over. All because the Brits finally said enough is enough. Change can happen, so stop hiding behind your cynicism and learn a lesson

matermaker's picture

That's exactly what I was trying to say.  The universe always finds balance, eventually.  I refuse to be a defeated beaten down bitch who can only complain.

finametrics's picture

I don't get it. What do u propose?

Spungo's picture

I'm starting to like Goldman Sachs. How badass is it to lie to people 100% of the time and still have people listen to you? They could tell people to stop washing their hands before performing surgery, and people would actually listen.