Shocker: JPM Sees Gold At $2,500 By Year End

Tyler Durden's picture

We though we had seen it all... Then JPM's Colin Fenton came out with a prediction of gold hitting $2500 by year end. That's right: JP Morgan... $2500...."Gold and sugar have potential to run a lot higher. It has been clear for weeks that the prompt CMX gold price has been building in a rising probability of a reflaring of financial crisis, gaining by 9.7% since June 30 as the MSCI World Equity index dropped by 10.1%. The correlation in daily price changes between these two assets has dropped to –0.09 from +0.29 over the prior year. Gold’s correlation against TIPS has doubled to 0.35 from 0.18. Against Italian and Spanish 5-year sovereign CDS prices, the gold correlation has moved to 0.27 and 0.32, from 0.07 and 0.04, respectively. Before the downgrade, our view was that cash gold could average $1800 per oz by year end. This view will likely now prove to be too conservative: spot gold could drive to $2500 per oz or higher, albeit on very high volatility." Funny, when discussing yesterday's Goldman upgrade of gold we said: "Next up: everyone else." Little did we know...  Also, it is unclear if Blythe precleared this client note. But at this point it probably does not matter.

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BaBaBouy's picture

 

GOLD To The Moon ...

bankrupt JPM buy silver's picture

Notice how they didnt mention silver.  Hi Blythe!

slaughterer's picture

Off topic, but there is some major call volume on SPY and SDS today.

Ahmeexnal's picture

Blythe is going home in a bodeee bag!

Vinny's picture

Blythe is fantastic. I honestly don't understand all this hostility aimed at her.

Cast Iron Skillet's picture

yeah, LEAVE HER ALOOONNNEEE!!!! :-)

fuu's picture

JPM down 6.36% so far today. Can we see a -10% trifecta be EOD?

Popo's picture

So, now we believe JPM guidance?   I'm confused.

cossack55's picture

Danger zone in JPM land is when silver spot is more than a share of their worthless criminal ass.  The whole cornered rat thingy.

EscapeKey's picture

All press releases from the likes of JPM, GS, ... are marketing material only, and can't be trusted over a magic 8-ball.

Vinny's picture

Yeah, and they don't mention copper either.

Motley Fool's picture

or iron even. for shame. ;)

davepowers's picture

silence on tungsten as well

ZeroPower's picture

Yes, its in the report:

In the near-term, we would want to own a basket of Brent crude oil, gasoil, gold, raw sugar, copper, corn, and wheat, while hedging this risk by underweighting or shorting a basket of WTI crude oil, RBOB gasoline, aluminum, zinc, and North American natural gas. Despite the novelty of a US downgrade, a debt-focused scare is normal for this stage of the business cycle.

We find reassuring evidence of solid commodity fundamentals in the shape of the forward curves for copper

and fuel oil on the Shanghai Futures Exchange (Exhibits 7 and 8).

janus's picture

ZP,

exactly what everything i'm learning says...but janus asks, why not heavy up on sugar, gold, copper and wheat (and of course brent...the lybian protests are swinging TO ghadafi)?  why not narrow it still?  i always thought the parlay was a losing bet...over time.

trav7777's picture

Gold now at price parity with Pt...paging doChen lol

Last time this happened was the depths of 08, IIRC.

IQ 145's picture

completely meaningless. you might as well listen to static on the radio. Also, you're completely wrong about Silver; then major demand and buying is coming in from the east on the Silver is money motive; lecturing the markets doesn't work. If the market says Silver is money, then it's money.

nuinut's picture

... and if the market says its not?

 

Gold has a specific function as an undilutable store of value, and it is this function that gives it value.

Silver tags along for the ride because some investors think that because silver also performed this function at various times and places in the past that it will continue to do so.

Who owns gold? The big players. Central Banks and the very wealthy (already rich).

Who owns silver? The industrial users, and little guys (speculators, hoping to get rich quick).

The store of value function does not require scarcity of supply, or competition with industrial users. These are actually negative factors in this regard.

The store of value function requires stability of stock, and the store of value function requires only one instrument.

 

Ultimately, buying silver is betting against gold, because the store of value function requires only one instrument.

Do so at your own peril.

 

Silver is, and will trade as, the critical industrial metal that it is.

Silver is poor man's gold. Think about it before following the herd.

nuinut's picture

Gold will value the dollar at a lot less than $1/2500th oz before it is finished with The Return to Honest Money.

Fiat2Zero's picture

Not exactly.

Silver has functioned, throughout history, as the principle metal exchanged in commerce.  You can't buy a loaf of bread with a fucking kruggerand.

In China and India, people already know this, and own both gold and silver, used in a variety of ways.  Silver demand on an investment basis is outstripping gold on a dollar per dollar basis.

And I wouldn't put too much faith in "the big boys," remember, they sold their gold (central banks) and are now buying it back at 5 times the price.  Comparing a central banker to a typical ZH reader and concluding that the banker is the "smart money" is a bit much.

As far as your "who owns silver?" claim you're way off base.  There are plenty of gold speculators, and plenty of rich people who are long silver.

You are correct that silver is currently viewed (by some) as an industrial metal, however, that sentiment is rapidly shifting.  It's easy to see this (or at least that's what I'm infering) by the behavior of the silver price compared to equities (it's less and less a risk asset and/or commodity, especially if you subtract the influences of the "11th hour" engineered takedowns in the COMEX).

That a store of value only requires one instrument, is a ridiculous idea.  There are many stores of value.

The fact is that silver has a longer history as money than gold does, and it is has been used far more w.r.t. commerce than gold.

Now, you may be nervous that it's volatile.  And you may watch gold when it takes off and sluggishly pulls silver behind (during risk-off periods).  That's fine, but no need to think you're superior.

As far as following the herd, JPM uses the herd to its advantage and is now calling for $2500 gold at the end of the year, which is a high number, even amongst the gold experts (the highest I've seen is $2,000 by years end).

So maybe you're just in a different herd.

BigJim's picture

You can't buy a loaf of bread with a fucking kruggerand.

No, but you can buy a loaf of bread with a piece of paper that represents ownership of a fraction of a kruggerand. And you must be into some truly boutique breads if you're suggesting we should go buy a loaf with an oz of silver.

Otherwise I'm inclined to agree with you... gold may be favoured as money in the West, but silver is very popular in the East. And last time I looked, they're the ascendant powers.

janus's picture

F2Z,

Bravo!

Your friend,

Janus

trav7777's picture

do you people even bother to CHECK your facts before talking shit?

Silver investment demand was around 200Moz in 2010.  Gold's investment demand Q1 2011 was approx 310 tons or around 9Moz.  I'll leave the GSR to you and I assume you can multiply by 4.

trav7777's picture

Look, take it from a guy a couple sigmas to the right of you, OR just go the fuck out on teh interwebz and goggle something like "silver industrial demand" before spouting off, ok?

Well OVER HALF of silver consumption is industrial.  I already posted this data in rebuttal to tmosely-claven in a previous argument on this very topic.  You would do well to review it before embarrassing yourself further

tmosley's picture

I'm afraid you aren't a "couple of sigmas" to the right of ANYONE around here, retard.  You can't even tell the difference between rising and falling.  It's like you're a fucking goon with a Hitler Complex.

BaBaBouy's picture

 

Grab your GOLD, Bitchez ...

 

U.S. could run off with other nations' gold, Rickards tells CNBC

 

Submitted by cpowell on 04:52AM ET Monday, August 8, 2011.

Geopolitical analyst James G. Rickards, who spoke at GATA's Gold Rush 2011 conference in London on Saturday, was back in the United States this morning for an interview about gold on CNBC, where he said the United States is a gold superpower and, as currencies collapse, well might confiscate the gold it vaults for other nations.

The interview is five minutes long and you can watch it at the CNBC archive here:

 

http://video.cnbc.com/gallery/?video=3000037455

Bam_Man's picture

By golly, that could start a war!

Temporalist's picture

That's not news from him he's been saying that for months and James Turk also released an article last month trying to prompt the Germans to find out where their gold is as it's not all in the Bundesbank.

cossack55's picture

Yeah, but we all KNOW WHERE that old kraut gold came from via Poland.

ForWhomTheTollBuilds's picture

What I find valuable about tracking discussion of gold in the mainstream press is that you can gauge recognition.  Some of those hosts were nearly screaming "it has no intrinsic value" (where they used to just laugh) and the other half were sort of throwing their hands up and *almost* admitting they don't understand the situation at all.

 

We edge closer to the "come to Jesus" moment on gold by the day.

trav7777's picture

THEY have no intrinsic value.

Please let one bugz say that in response just once.

Let the MSM bleat that stackers are idiots.  Housing wasn't in a bubble either; they all said so.

ForWhomTheTollBuilds's picture

I guess what Im getting at is that as scary as JPM publicly going long is to gold holders, I just don't see any evidence that you could walk into a mainstream media debate or a bar and say, "gold has good money properties" and be understood by anyone.

 

Its not that they disagree.  They just don't "get it".  Paper money being valuable makes perfect sense to them and gold is just ridiculous.

 

More evidence that gold is going up to "stupid" values before it settles anywhere near "fair" values

Temporalist's picture

Yes you are right.  But then do people know anything about truth anymore when the corporate controlled mass media is feeding them their misinformation?

You are ahead of a meme and it has only just begun even though PMs have been on a great 10-11 year run already.

Think of all the people that sold their gold at $900 thinking they were getting an awesome deal!  Now none of them have that "junk to "scrap" and the people that had some foresight are thinking "I told you so."

While few people I know have listened about buying, at least I convinced them NOT TO SELL!

US Uncut's picture

Great video. What do you think of it's merit?

Smiddywesson's picture

I call BS on the gold confiscation theory.

The slow acquisition of gold by central banks and supression of prices requires worldwide cooperation between central banks and governments.  They know exactly where this is going and exactly how to get there, so they are stacking gold. 

There is no way in Hell they could get that cooperation if anyone thought the USA would steal their gold.  By the time this is over, the USA won't need to steal their gold, because all the central banks in the world will have all the significant amounts of gold.

Rather than steal other nation's gold, why not just use your worthless paper and buy more during the 4 year kick the can session?  I personally think the big double cross occuring is that central banks are buying more than their agreed allotment, and that is why we have price spurts like we do.  There will be no confiscation of any large gold holdings of large countries.  Now small countries like Iraq or Lybia, yes that is possible.  The rest is baloney.

This conspiracy didn't start yesterday.  There is a reason why gold was held in NY long after the danger of Soviet occupation had past.  Conspiracy and lies are the basic nature of central banking.

cossack55's picture

Agreed. As someone on AH pointed out earlier, IRAs/401Ks are the new gold ready for confiscation.  So much easier done electronically. Gold is damned heavy.

trav7777's picture

confiscation leads to political turnover..this is why it won't occur.

Taxes and bait will accomplish it.  Those smart enough to not take the bait will be fine.  But many of the sheeple will GLADLY accept a "guaranteed return" from an insolvent government.

Those who don't may elect to take their 401 and cash it out, but the choice will be yours.  It's like in the Matrix; the shit won't work by force.

Citxmech's picture

If you don't hold it - you don't own it.

Fiat2Zero's picture

A very cogent interview by Rickards on KWN as to where the US gold is and who owns it.  I highly recommend it (well worth the 15 minutes if you are into gold).  Rickards is unparalleled in his geopolitical/financial analysis.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/8/6_Jim_Ri...

 

BigJim's picture

He's definitely worth listening to, on practically any money-related subject.

In the CNBC video you can see him wincing at the utterances of the morons surrounding him. The guy at the end, going on about how an economy can't expand if the money supply doesn't - Christ on a bike, how do these idiots hold on to their jobs?

zorba THE GREEK's picture

That warm fuzzy feeling that I've been getting from gold's ascent is turning into a light-headed euphoria.

I going to have to lay down now.

thunderchief's picture

Wrongo Bongo Mr. Chongo!

Silver

My leetle chapuca....

thunderchief's picture

Silver is in the it's Pacific "Midway" battle right now.   Look at Kitco.  As gold hits over 1700,  JPM is pulling out all its stops to keep it below 40, because they know what will happen if it explodes.  They explode with it and the game is over.  FU JP Morgue..  Go to Hell if there is one, or if we can get together and create one for you all the better.  FU....

Fiat2Zero's picture

I completely agree.  It's amazing the number of whacks that silver takes during the LBMA trading, only to quickly rise back up during Asian trading hours.  It's not clear how long they can keep it up, as gold is going to relentlessly pull silver up.

 

US Uncut's picture

And what about silver? It can't stay stuck at average $39.

Cash_is_Trash's picture

It won't, bitchez

Trade of the decade here we come, to the MOOOOOOON

Spitzer's picture

Remember FOFOA's take on silver ? Its just a spec long option on gold prices. The central banks aren't buying any.

DoChenRollingBearing's picture

+ $1714

+ $2500

then:

+ $55,000