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Morgan Stanley's Q3 Outlook On Gold, Silver, Rare Earths And Every Other Metal Under The Sun
Morgan Stanley has released its comprehensive quarterly metals outlook update for Q3, which while traditionally furiously wrong in its price targets for the assorted metals under consideration, represents one of the best reference materials for the underlying fundamentals behind each hard asset including base and precious metals, steel and bulk commodities, mined energy, rare earths, even such arcania as zircon and titanium dioxide. We suggest readers avoid the conclusion by Morgan Stanley which ultimately will be based on the firm's prop trading bias, and instead focus on the key supply/demand mechanics in any given product. For the sake of reference, we break down MS' outlook on gold, silver due to the special place these hold in the modern geo-political and voodoo economic discussions.
Gold
Investment demand is strengthening again…
- Identified and implied investment has become the main driver of demand in the gold market over the past decade and has become essential to absorb the fundamental surplus resulting from mine production, secondary supply, any net sales from central banks and producer hedging, and the long-term decline in jewellery fabrication demand.
- As the transparency of reporting of bar hoarding demand has increased along with the growth in physically backed ETF demand, the depth and structure of the physical investment market has become more visible. In our view, assessing the sustainability of this investment flow has become critical to the gold price outlook.
- According to GFMS, total identifiable investment demand for gold reached a record 1,514t in 2011, or 1,675t if implied investment demand is included, for a new annual record of US$66bn.
- More dramatic growth in investment demand for gold can be pinpointed to 2008-09 and the global financial crisis, which raised serious concerns about a debt deflationary spiral and the long-term purchasing power of the world’s major fiat currencies, especially the US dollar and the Japanese yen.
…as sovereign debt concerns highlight fiat currency risks
- More recently, a sharp rise in inflationary pressures partially driven by a surge in oil prices since February 2011 and the growing risk of sovereign debt default in peripheral countries of the Eurozone have given added impetus to investment demand growth as the fear of sovereign debt contagion has also raised questions over the long-term future of the euro.
- Even more recently, the impending threat of technical default by the US government if the government debt ceiling is breached, and the associated risk of a sovereign debt rating downgrade if a satisfactory long-term debt reduction program is not established have added to investor concerns about the long-term outlook for US treasuries and “risk-free assets.”
- In these circumstances, we expect the long-running bull market in gold will receive further impetus, even if there is no return to QE in the US. However, QE3 is a potential further upside risk to prices in the current environment.
- A further illustration of the growing quasi-monetary role of gold in the current global financial environment has been the persistent trend in official sector sales from net selling to net buying, a trend that we expect to continue, especially now that the sale of the IMF gold tranche has been completed.
- We have increased our annual gold price forecasts by 8%, 22% and 24% for 2011, 2012 and 2013 respectively to US$1,511/oz, US$1,624/0z and US$1,550/oz.
Global supply / demand
Silver
May 2011 correction has reduced risks of demand destruction…
- As GFMS observed in the 2011 World Silver Survey published for the Silver Institute, silver’s “hybrid” precious and industrial nature leads to links with gold, copper, and the CRB index, which can vary greatly.
- In the course of 2011, silver’s precious metal status and therefore its links with gold have been strongly reinforced by investors’ preference to hedge systemic financial risk, rising inflationary pressures, and resurgent political risk in MENA through a cheaper vehicle with characteristics similar to gold as a store of value.
- Driven by a spectacular rally between late March and May led by retail investors, the gold:silver ratio narrowed sharply, reaching its lowest point since October 1980 in early May 2011 at 30:1.
- Closing prices for silver at the peak of the rally in late April 2011 at US$48.70/oz came within 1.5% of the all time high established in January 1980 during the Hunt brothers’ squeeze. Successive increases in the Comex margin requirements then saw prices trade between US$33 and US$36/oz and the gold:silver ratio stabilize around 40 to 44:1.
…helping sustain investment demand going into 2012
- In our view, the 2,000t outflow of silver from ETF funds that has followed this correction is likely to be temporary, as all of the drivers for the initial 3,500t surge in ETF inflows between September 2010 and late April 2011 are still in place.
- Furthermore, the lower trading range for prices since the crash in early May should be an incentive for investors to return to the physical investment market now that the impact of the violent correction has largely been discounted.
- Investor sentiment should also be encouraged by evidence of strongly rising fabrication demand, especially in the brazing alloy/solder and jewellery markets, which are forecast to grow by 8.2% and 3.7%, respectively, in 2011.
- As a result, we have made significant upgrades to prices throughout the forecast period. For 2011, we now expect an average price of US$36.21/oz, up 15% from our previous forecast, and in 2012 we see prices averaging US$36.90/oz, 30% higher than our previous estimate.
- For 2013, we have raised our forecast 32% to US$32.98/oz.
Global supply / demand
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Fuckers.
too nice of a word to describe them.
Now we know MethMan works at Morgan Stanley.
Where is old Meth these days? New account?
He's busy picking lumps of silver and gold off the ground.
who wouldn't for that price?
Here, I got a prediction for ya..
How about Morgan Stanley BANKRUPT by 2013, because they are To Small to Succeed..
To a bankster, precious metals are like kryptonite
Natural competitor to their synthetic products.
If Morgan Stanley investors want to sell me their silver at $32/oz, I'll buy.
More banker BS. 2013 predictions of $32.98 Silver & $1550 Gold? HAHAHAH yeah ok. These iddiots are desperate. Keep stacking Silver and let's take these monopoly mother (sudden debt comment) down!!
The Rothschilds and the Hong Kong Mercantile Exchange
http://dont-tread-on.me/the-rothschilds-and-the-hong-kong-mercantile-exc...
+1 fuckin a
Price smashed in 07 yet bullion holdings increased. Hummmmm.
www.silvergoldsilver.blogspot.com
I want my five minutes back I took to skim this post. What useless crap.
Read between the lines.....How often do WE get a 'heads I win tails you loose' deal? No budget deal, gold immediately goes up. Budget deal of the caliber DC is currently flying, and debt creation guarantees it over six months. QE3 or this.
Why the refusal to audit Ft. Knox? This chart makes that easy to understand
You want to be the reserve currency, you have to bullshit the world that you have over twice as much gold as anyone else. Apparently possession IS 9 points of the law. If we have it in our vaults (true or not), we can count it regardless of who leased it. If I only believed that our 'elected representatives' would honor our claim over their paid masters who leased it. Sadly, that is not the case.
Oh shit - gold is going to under $1200 by 2016. How can I sell my gold thingies in aftermarket?
hold them till you die
give it to your kids, for "in case of emergency"
no inheritance tax
Mr. T knows what's up.
hold them till you die
give it to your kids, for "in case of emergency"
no inheritance tax
Mr. T knows what's up.
They should short gold.
They have, trust me
pypf ( piss your pants funny ) !!
FTW!
<-----To the moon with PM prices
<-----Correction and buying opportunity on the way
Cheesy insta-poll
Both, whatever suits them best on any given day.
Both, whatever suits them best on any given day.
Lucky for you voting doesn't affect your total score (yet), otherwise you might disappear!
Meanwhile, I keep trying to vote for both, but like the criminals in DC, only my last vote is recorded.
*flip*
*flop*
*flip*
*flop*
You DO realize that you just started an "insta-poll" trend? - Brilliant!
<===== Thanks!
<===== Blow me
Oh yeah - how fun! Every reply will have to start with these two lines.
<-- Silver?
<-- Gold?
+10 :)
Thanks. Just havin a little fun with the new ratings system.
I like that I can click-+ now but I don't like it all up in my face.
I am getting used to it. I hated it at first.
These Morgan dopes sure know paper metals. What do you think the odds are any of them has ever seen a real Morgan dollar or St. Gaudins. Fools. Bankrupt soon.
http://www.ft.com/cms/s/0/317512ca-b797-11e0-b95d-00144feabdc0.html?ftca...
The SA mining sector is heading out on strikes. One wonders what that might do to the Demand/Supply situation.
Why the GSR ratio for only the last 41 years?
Why not the last 1,000 years and see what's deviant then?
And how about a bar chart of the known silver stockpiles being drawn down to nothing over the last 41 years? That might explain the deviation in the last 41 years in the historic GSR of 16/1 or so.
Because Nixon changed everything? ;-)
<==== Exactly.
<==== Bullshit, check your math.
Yeah, no shit. And by MS's own estimates, silver came out of the ground at a 24,000 tonne versus gold's 2600 tonnes which is a little over 9:1.
They really know how to go out on a limb. Looks like I better sell all my pms and short them. Sounds like a sound strategy. what a bunch of morons.
they do this on purpose in hopes you'll believe
Why would anybody trust or care about these fancy research reports spewed forth from these wire house chop shops?
Follow price and price only. Gold and silver are still performing well, but the mining stocks are still lagging as the Ratio Traders continue to gang-bang the shares as if they were girl-next-door types like "Bathtub" Becky Quick.
Here is the reason mining stocks still lag. Mines are subject to nationalization by the host country. The instant that government wants control of that mine it will take it leaving it's stock worthless. Not a single mine in the world is immune from nationalization, including the USA.
If you can buy into a company that has already been nationalized that risk goes to zero.
Anyway, I was thinking that the lag may have a lot more to do with 'discouragement' via naked shorting combined with complicit/incompetent/uninterested regulators. (Just a hunch based on conjecture shot from the hip tingling with Spidey sense.)
OTOH, when they've found their legs: wooo hooo! Oz blders.
Like with many other subjects, it is best to simply ignore Robo on this as he only has eyes for the dogs.
You get a " GREEN dart" because I like you!
Thanks Yen. Eyes peeled.
"I'd like to know just what I've done, to earn so much disrepect from everyone..." (language warning) "...I'd appreciate it if you could just calm down Mr.(Cross)... This conversation is over."
And not a single gold bar is immune to confiscation, especially in the USA.
....if it had happened before, I might be worried....at least ammo is covered under our Constitution.
Mining stocks tend to relatively lag during up price cycles for metals because it takes time for those to actually impact a mining company's bottom line.
Having said that, expect absolute blow out numbers from all the silver miners for the coming quarter....that will help re-focus investors' interest in these companies. We are about to see some net margins that will be breath taking. These will then be followed by several mergers / buyouts of smaller miners having good proven reserves....also fueling more investor interest.
FYI...for those on this board thinking they need barter goods to trade after the fall, might I suggest 223 ammo....it will be worth more than its weight in silver should that time arrive and it is cheaper than silver to buy today. There are some excellent buying opportunities right now on green tip penetrator rounds that were turned back by the military....check prices at Natches Shooters Supply...my order went in today for a few cases....
Wow! So little said with so many words
My favorite word they used? "hoarding"
Oh noes!!!1!1!11
More dramatic growth in investment demand for gold can be pinpointed to 2008-09 and the global financial crisis, which raised serious concerns about a debt deflationary spiral and the long-term purchasing power of the world’s major fiat currencies, especially the US dollar and the Japanese yen.
I was surprised they let "fiat" in there.
I noticed that too and thought WTF? Maybe they actually meant "tradition" ; )
Yeah, stop hoarding gold you fkrs. It's not like it's money!
Tyler or anyone else -
On the topic of silver, can you offer an explanation why 1-year SIFO has recently gone negative again? Is this meaningful?
http://www.lbma.org.uk/pages/?page_id=56&title=silver_forwards&show=2011
Thanks in advance.
I used to have average math skills:
Charts say US (Fed?) has 8000 or so tons of gold?
8000 x 2000 weight in lbs
16000000 x 16 weight in ounces
256000000 x 1619 ounces multiplied by current value
414,464,000,000 Correct my math if I'm wrong (I was hoping for a few more zeros...yup we're fucked). Maybe the whitehouse should start sucking Chinese cock for hard assets to pay off debt....
What you should do is calculate what the price of Gold must be to cover all the Dollars that have been printed and digitized.
The last time I did that it came to $42,400 an ounce but that was before QE2 and that also assumed there really is 8,000 tons of Gold.
(There is a good reason assume starts with ass. Assumptions lead to making an ass of yourself.)
Somewhere around $60k per ounce
you know, i really like your screen name. it has such a nice warm fuzzy feel to it..............
Regarding printed vs. "digitized" currency. I wonder what the ratio of all the currency in the world is of paper vs. digital? My guess is the vast majority of all the world currency is digital.
What if TPTB decided to just erase/delete all that digital currency floating around out there? Then they would re-price gold against the remaining left over paper currency? I wonder what gold would then calculate out to in order to cover just the left over paper fiat debt? What if by that calculation gold becomes much less valuable...under 1000/oz or maybe even lower? Could they do that?
They don't call 'em TPTB for nothin'. They're never going to let those of us who own gold and silver have it for 10's of thousands of "dollars"/oz. They're never going to let us use it to bail ourselves out by flipping our gold and silver into vast tracts of land with nice homes hidden away from the nasty world they are trying to build. They'll never let most of us be on their level in any way. They're building a massive one world oligarchy, and we ain't invited to the party no matter how much gold or silver we own.
Why wouldn't they have an end-game scenario to either devalue it to nothing and/or then confiscate it? Then they have all the gold get to keep on ponzi'ing like it's 1999, and we're fukushima'd all over again.
I dunno...just trying to think like those scumbag sociopathic mother F'ers, but it's not easy to do for a normal guy trying to prepare for their end-game and anything else they throw my way.
I will keep stacking my phyzz though...and preparing every way I can w/ food, supplies, guns and ammo. I won't go down w/out a fight that's for damn sure!
I did that calc back in 2008 and it came in around $2,600 per troy oz, less if you discount how much FRN is estimated to be held outside CONUS and could be made worthless if unexchanged in a timely fashion.
keep up the thought experiments and you might be inducted into the oligarchy consolation prize hall of fame.
Au in Ft. Knox = 147.2 million oz troy (hey right) thats what wikipedia saids.
1 troy oz = 1.09714286 oz which yielding 161499428.992 oz. @ 1619 a sum of $261,467,575,538.
someone check my math and logic
1. Ft. Knox does not have all of the US gold - add in NY Fed holdings = aprox 8 tonnes.
2. No need to convert the ounces if quoted in troy, that is how it is priced (31.3g per ozt, not AV oz @28g)
So $238,316,800,000 USD gold in Knox.
Good math skills, metals knowledge - not so much...
Tonne (Metric) = 1,000 Kilograms
Kilogram = 2.2 pounds (Imperial)
Tonne = 2,200 pounds
Pound = 12 Troy ounces (31.3g, not AV pound = 28g per oz = 16 oz)
2,200 pounds x 12 ozt = 26,400 ozt per tonne
8000 tonne x 26,400 ozt = = 211,200,000 ozt x $1619 per ozt = $341,932,800,000.00
Way worse than you thought.....
$36.90? I'll take all you got...
You know, of course, that they didn't mention that by 2014 the old dollar will be replaced by the new dollar at an exchange rate of 10:1?
Mexico did that a few years back and it is no problemo....
I just wish we would get rid of those phuquing pennies....what a pain in the ass and total waste of money by the government....might as well get ahead of the game and kill the nickel at the same time....
Why kill the Canary? Don't you realize that the penny was the first Canary to sing the warning about the dollar debasement? Now the nickle bird is singing loud and strong and nobody is listening. It's not that the metal in the coins has gotten more valuable, our friggen FRN has become worth(less) to the point where base metal (copper and Zinc) is worth more than the coin.
We don't need to get rid of the Penny, we need to get rid of the FED!
Should read:
Global Metals Playbook: 3Q11
Navigating our heightened risk aversion.
What a bunch of bloody crooks. Does this mean QE3 is going to pump up Alcoa after years in the doldrums? - I mean how the fuck does it make any sense to pimp Alcoa and then post receding industrial production on the next page? Anyway, I would really love to know from whose anus the predictive algos were plucked out to forecast to 2016 in industrial production. What a load of pure grade bull. These people need to go to jail.
What a waste of time and ink. They might as well have created some new Federal Reserve Notes with that ink. For just $1,000,000 I could have sold them my analysis.
"As long as the U. S. creates Federal Reserve Notes and debt above and beyond a commensurate rise in goods and services, buy gold. When that trend ceases sell just half of your gold, because it probably won't last very long."
Where do I send my invoice!?
Tuco Benedicto Pacifico Juan Maria Ramirez
Silver tonnage for Coins and Medals peaks in 2011!!! then they predicy that there will be a fall off year on year. I disagree strongly - they havent taken in to account what I'm going to buy next year.....
I also find it difficult to accept the uge increase in ETF stocks projected over the next few years.
I'll ignore this report,
Fundamentalzzzz havent changed, keep on stackin.
One of my peers is all in tears. He needs to start paying attention to those nagging little doubts...
None of these Wall Street whores have been right about the metals in decade. Wait for the US defalut and watch everything collapse, then buy gold and silver like a drunk motherfucker on steroids. Just keep on stackin and if you haven't yet, buy the Iraqi Dinar. A little bird told me it's going to be pegged to the GBP and there are millions to be made. The dollar will be toast short term until the idiots in D.C. back it with metals again.
The only forecast more ridiculous than Morgan Stanley's on the metals would be Morgan Stanley's 5.50% EOY 2010 target for the 10-Yr UST.
I mean, can these guys really be SERIOUS? Are they doing this for laughs?
The people of the world will chose the fiat price of gold/silver, dumb ass GS.
Ummmmmm, this was from MS?
Why are analysts still pencilling in $800 gold when they generate research and price targets on gold miners?
The Continental Dollar
After the American Revolutionary War began in 1775, the Continental Congress began issuing paper money known as Continental currency, or Continentals. Continental currency was denominated in dollars from 1/6 of a dollar to $80, including many odd denominations in between. During the Revolution, Congress issued $241,552,780 in Continental currency.
Continental currency depreciated badly during the war, giving rise to the famous phrase "not worth a continental". A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit. "Some think that the rebel bills depreciated because people lost confidence in them or because they were not backed by tangible assets," writes financial historian Robert E. Wright. "Not so. There were simply too many of them. Congress and the states lacked the will or the means to retire the bills from circulation through taxation or the sale of bonds.
Another problem was that the British successfully waged economic warfare by counterfeiting Continentals on a large scale. Benjamin Franklin later wrote:
The artists they employed performed so well that immense quantities of these counterfeits which issued from the British government in New York, were circulated among the inhabitants of all the states, before the fraud was detected. This operated significantly in depreciating the whole mass.
By the end of 1778, Continentals retained from 1/5 to 1/7 of their face value. By 1780, the bills were worth 1/40th of face value. Congress attempted to reform the currency by removing the old bills from circulation and issuing new ones, without success. By May 1781, Continentals had become so worthless that they ceased to circulate as money. Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war. In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value. Continental bills are now very rare, and are sought after by collectors.
After the collapse of Continental currency, Congress appointed Robert Morris to be Superintendent of Finance of the United States. Morris advocated the creation of the first financial institution chartered by the United States, the Bank of North America, in 1782. The bank was funded in part by specie loaned to the United States by France. Morris helped finance the final stages of the war by issuing notes in his name, backed by his own money. The Bank of North America also issued notes convertible into specie.
The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit, or "make any Thing but gold and silver Coin a Tender in Payment of Debts."
what, 1511 for 2011? gee ya think..............ha ha ha ha ha
Newsflash - more crooked banksters calling THE top in Pms.
Asshats.
Soros is closing his fund to outside investors. All to do with Dodd-Franks, nothing to do with the fact he is down 6% YTD.
Anyhow, he says Gold to $4000 within five years, FWIW.
http://www.independent.co.uk/news/business/news/soros-returns-1bn-to-inv...
The old Fuck just wants to enjoy what little time he has. He has enought money at 81 years old.
That worthles 'ASS Clown has less than 1b under management...' he is just in- doctrinating his next round of SORITES.
R.I.P. in hell SOROS!!!
WTF? Here's my synopsis of their report on silver. "Everything is great for silver... fundamentals, chart, investor sentiment. It's all good and we love it so much we are willing to forecast next years average price 20% lower than today's close and 40% lower than this years high." This way if it goes up another 20% to 80% from here we can say told ya so and if it goes down 20% from here we can say we were spot on." Fucking brilliant.
Haven't a couple of Morgan Stanley execs already predicted QE3? If so, how the hell is that reconcilable with this forecast projecting lower gold in the coming years?
.....that would be in nuevo dollares....after a 10:1 reverse split....that info was in a footnote to the report, buried within the lawyer-speak disclaimer section, in case you missed it.
What morons invest with these idiots (or should I say purposeful propagandists). Their own charts belie the narrative. Their 2012 price will be reached this week. Their silver prices are a joke unless they have inside info that Obama/JPM are going to nationalize all silver mines; 100% tax it, or sent TSA to pry it out of our "cold dead hands".
Gold setting up for new all time highs overnight, so far 1623. $41 silver behind defended but not likely to hold if gold keeps it up.
Is [ ENERGON cubes, and HOPEINITE] on that list???
Never trust anything that comes from a company (or person) with two first names!
These guys have been so "off" on their annual price calls that this report is not worth the electrons its written with.
Irrelevant to those of us who purchase physical with an eye to heirloom positioning.
Preserving wealth beyond our own lifetimes because we realise that we are trapped in a house on fire is a labor of love, and the privilege of the wise.
...I prefer to collect guns...more useful and if chosen correctly, they appreciate in value.
Another labor of love, and an especial favorite of mine. Tends to make me very popular with the next generation.
Good luck with your own endeavors.
What about palladium and platinum? Roughly speaking, there is 10x more silver mined than gold, and 10x more gold than platinum and palladium.
stocks, bonds, money market, options, structured products etc. etc. etc. = fees/commissions
gold = store of value
enough said. don't listen to sell side wall st. on gold or pm. research is a marketing function. LOL.
Morgan Stanley's estimate for 2011 ETF Holdings of silver is 22733 up from 18408.
They computed that to be a decline of 76.5%.
Their arithmetic is also wrong for the five percentages to the right.
a pamphlet named the "the fourth turning" gives thee a new investment outlook.
Morgan Stanley's Charts are not what I am seeing at 3 AM this morning the 7-27-2011.
Gold 1624.12
Silver 41.40
Platimum 1815.20
Palladum 842.00
Gold yesterday hit and resisted breaking 1618 most of day, finally went through overnight to current number.
Silver is the big one. It seemed that it would not get past 48.900 (Yes third decimal) and during sleep it did, and big. The number of Bids are constant with several very large 25,000 + Orders that will define the Silver Today. The number of Sellers are competing about the 45 dollar mark.
My point is very simple. Tear up the charts and stop drawing pretty papers with colors. They need to rip em up and start working the metals market. I am no expert but if MS says 32 Silver, I say BULLSHIT. 1550 Gold? YEAH RIGHT! etc.
I expect another long day of more of the same action.
UBS just increased their 12-month target on gold to $1800/oz. I do not like when all these morons turn bullish on gold.
Did anyone download actual document?? they took it out from article, deadly need it for my school report ..
thanks in advance
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