Morgan analyst sees gold at $2,500 by year-endMorgan analyst sees gold at $2,500 by year-end
Tue,2011-08-09 03:55
By Andrea Hotter
Dow Jones Newswires
via The Wall Street Journal
Monday, August 8, 2011
LONDON -- JPMorgan has become the latest bank to up its forecast for spot gold prices,hiking its estimates by a whopping 39% and predicting the precious metal toreach at least $2,500 a troy ounce by the end of the year. This is almost $800 per ounce higher thancurrent levels, which represent an all-time high. The U.S. bank had previously expected spotgold to be at $1,800 per ounce by year-end.
The move will come amid very high volatility, the bank's Colin Fenton said,and is being driven by "rising probability of a reflaring of financial crisis." Earlier Monday, Goldman Sachs raised itsforecast for gold, saying its economists now place a one-in-three chance of a U.S.recession that would most likely occur within the next six months. But itsprices are significantly lower than JP Morgan's, with Goldman predicting a spotprices of $1,645 per ounce in three months and $1,730 per ounce by six months. Goldsoared higher overnight and has become an investor favorite amid deterioratingeconomic conditions in the euro zone and the U.S.
Friday's downgrade of the U.S. credit rating from AAA to AA-plus by ratingsagency S&P triggered the most recent strength in gold, which leapt over $70from Friday's low to peak at $1,715.29/oz earlier Monday.
MorganStanley, ANZ, UBS, MF Global, and Barclays Capital last week all upgraded theirgold price forecasts, while producers like Barrick Gold, AngloGold Ashanti, andRandgold Resources have been making bullish statements in support of furtherrises in recent days.
But JP Morgan said it isn't just gold that will benefit from the financialmalaise. Commodities geared toward Asia, investment, andinflation will outperform commodities anchored more to the growth prospects andlocal supply chains of the United States."The bullish basket includes Brent crude oil, gas/oil, gold, raw sugar,copper, corn, and wheat," said JP Morgan's Fenton. "The bearishbasket includes WTI crude oil, RBOB gasoline, aluminum, zinc, and NorthAmerican natural gas."
So with JP Morgan on record that gold could reach $2500 by year end, what do you suppose will happen to silver? And to SBB stock??? I am still more than amazed at all those who sold SBB stock below $6.00. As I write this, gold is at $1770 and rising. In the past two weeks, gold has moved up 10%, yet in that same period of time, SBB stock has dropped as much as 30%. Silver is about flat during this period. Who "invests" like this???
Worse yet, folks are buying TBills at near 0% interest instead of holding cash (which by the way, pays about the same interest). This sounds like a story line from one of those Grade B or Grade C movies. You can't make stuff like this up....