(FXEmpire) - “In a report published Thursday, the bank (i.e. Goldman Sachs) said that it is raising its 12-month price forecast to $2,150 an ounce, up from its previous target of $2,000. The bank also recommends buying December 2022 gold futures.” Kitco News 01/26/2022
Here is a similar news report from six months ago:
“In a situation of continuing global recovery and only moderate inflation, Goldman Sachs expects a gold price of US$ 2,000, which would imply an upside of about 10% from current prices.” Kitco News 07/06/2021
Six months earlier, Goldman was more optimistic
Goldman Sachs sticks to gold price target of US$ 2,300 for 2021:
“The global investment bank Goldman has reiterated its previous 12 month target of US$ 2,300 for the gold price.” . 11/17/2020
Finally, prior to that, is this Goldman Sachs projection from July 2020
Goldman Sachs raises the gold price forecast for the next 12 months from USD 2,000 to USD 2,300.
According to a team of analysts at Goldman Sachs, the global investment bank, the rise in the price of gold to new highs, which lately has outpaced gains in real interest rates and other alternatives to the US dollar, has been driven by “a potential shift in the U.S. Fed toward an inflationary bias against a backdrop of rising geopolitical tensions, elevated U.S. domestic political and social uncertainty, and a growing second wave of COVID-19 related infections.” 07/28/2020
At the time Goldman raised their projection for the gold price to $2300 oz, gold was already at $1958 oz. After hitting an intraday peak of $2060 oz. a few days later, the gold price quickly moved back under $2000 oz. and has not exceeded that price since.
Question: Why Is Goldman Still Looking for 2k Gold?
Goldman Sachs repeated projections for a future gold price at $2000 oz. or better have come after the gold price exceeded the expected target, rather than before. And the pattern is similar to that which occurred after the post-2011 gold price peak of $1895 oz…
“The gold price should continue to climb in 2012… with the price forecast to hit $1,940 from today’s $1,607.”
Following that officious pronouncement, the gold price continued its decline to a low of $1049 oz. in December 2015 and did not reach the projected target until nearly five years later after that.
Why does Goldman persist in making predictions for a gold price that has already occurred?
Answer: It’s Part of the Game
It’s not just Goldman Sachs. Wall Street doesn’t like gold.
Financial advisors are in the business of managing money. So in order to satisfy the demand for gold-related investment vehicles, it has given us a plethora of stocks, mutual funds, ETFs, and other paper substitutes and products that supposedly represent the real thing.
Your broker or financial planner can easily incorporate these types of investments into your asset allocation model without too much trouble.
It boils down to marketing. It’s all about money under management.
Your broker or financial planner isn’t going to tell you to buy gold coins with 10-20 percent of your assets and take delivery of them. But he or she might tell you to put some of your dollars into a gold-related mutual fund or ETF.
How Goldman Sachs Really Feels About Gold
In late July 2020 during an interview with CNBC, the chief investment officer of private wealth management at Goldman Sachs made the following statement:
“Our view is that gold is only appropriate if you have a very strong view that the U.S. dollar is going to be debased. We don’t have that view… So all this excitement and brouhaha about gold is not something that we buy into.” Sharmin Mossavar-Rahmani
Somewhat ironically, Ms. Mossavar-Rahmani’s statement was made just after a team of commodity analysts at Goldman raised their 12-month forecast for gold to $2300 from $2000 (same projection cited previously in this article).
Is Ms. Mossavar-Rahmani not aware that the U.S. dollar has already been debased by ninety-nine percent? And, that gold at $2000 oz. (a one-hundred fold increase from $20 per ounce) already reflects that debasement and subsequent loss of US dollar purchasing power?
Gold Value Is Not About Price
Projections for the gold price by Goldman Sachs and other Wall Street banks have little value for investors and others.
Gold’s value is not about price. In fact, the price of gold tells us nothing about gold’s value. (see Gold And The Elusive Chase For-Profits)
The current gold price is merely a reflection of the accumulated loss in purchasing power of the US dollar.
Further higher gold prices will occur only after additional loss of purchasing power in the US dollar – over a longer period of time.
By Kelsey Williams
