SocGen’s “crash scenario” for gold
Société Générale (“SocGen”) recently published a special report entitled “The end of the gold era” that garnered far more attention than we think it deserved. The majority of the report focused on SocGen’s “crash scenario” for gold wherein they suggest that gold could fall well below their 2013 target of US$1,375/oz. It also included a classic criticism that we’ve heard so many times before: that the gold price is in “bubble territory”. We have problems with both suggestions.
“Professor”,
Very much agreed. Unbelievable.
You should be careful who you believe. Some people say things for political reasons. E.g. much of the liberal media.
Some people say things for their personal gain, E.g. most mine promoters.
E.g. many stockbrokers pushing their latest offerings.
Be careful of people talking their book, or intending to mislead.
Double agreed.
Embry on manipulation:
http://watch.bnn.ca/#clip900741
Gold as an invest class is dead going forward.
Gold did a terrific job for past 12-13 years due to economic anxiety.
US was burdened with two unnecessary wars, banking sector was bloated with toxic mortgage derivatives, countries like India and China were growing at 8 percent annually – all these fueled to the gold appreciation.
Then US Fed found a magic formula of printing dollars and keeping inflation under control. Excitement is fading for Bric growth, US banks are flushed with easy money, No war like scenario…all in all, anxiety index has fallen to ground.
Gold will slide down to $700-800 range in next 2-3 years.
-Fundamentals, not anxiety, drives the gold price in the big picture.
-The U.S. is still burdened with the items that you listed.
-The Fed has no magic formula; inflation is not contained.
-When confidence returns in any meaningful way to the retail investor, inflation will soar as they “exit” cash.
Matt,
Yes, that will probably take decades. Economy is like a huge cargo ship, not a jet-ski – situation like this don’t change very easily and quick.
I don’t know about decades, but you could be right. I agree that the economy is not a jet ski, but I don’t believe that even a much longer correction would lead to $700-$800 gold. Even if demand falls off sharply when measured in ounces, it is unlikely to fall much, if at all, when measured in dollars when you consider this: http://mises.org/content/nofed/chart.aspx
Merrill Lynch thinks that a 70% fall in demand would still be enough to maintain $2,000 gold. http://www.gracelandupdates.com/images/stories/13march/2013mar19ml1.png
Silver- a huge cargo ship with a big leak in the hull.
Look for when funds and small speca are net Short in gold (and silver). That would likely be the end of a cyclical bear market.
Stock and US Trasury markets etc are pricing in perfection. It is total euphoria right now.
and what of sliver?
http://www.zerohedge.com/news/2013-04-08/80-chance-40-silver-short-squeeze
Notice how these “special reports” never come near the highs? Here’s another good one:
http://www.bloomberg.com/news/2013-04-08/soros-says-gold-no-longer-haven-after-euro-crisis-scmp-says.html
They’re simply trying to wring out every last weak hand. The timing says it all.