Goldman Sachs Forecasts Gold Prices To Peak At $1,750/oz In 2012

OPA

Goldman Sachs sees gold prices peaking at $1,750 an ounce in 2012 as strong U.S. economic growth is expected in 2011 and 2012 and U.S. real interest rates will begin to rise, the bank said on Wednesday in a research note.

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Ge whiz ... I can't believe the magic $2k an oz is not in their forecast.

Higashiyama

I shouldn't be too hard on my friends at GS, but that prediction is so precise, it is almost comic. However, detailed forecasts do help us think about reality as it evolves ...

Did I misunderstand the part about the long term trend line -- are they suggesting that it should be at about $ 450 in current dollars? I'd like to have a copy of the GS report.

cladking

<< <i>I shouldn't be too hard on my friends at GS, but that prediction is so precise, it is almost comic. However, detailed forecasts do help us think about reality as it evolves ...

Did I misunderstand the part about the long term trend line -- are they suggesting that it should be at about $ 450 in current dollars? I'd like to have a copy of the GS report. >>



Perhaps they meant that if the economy were healthy rather than on the
verge of hyperinflation.

If interest rates begins rising it will certainly be time to start lowering the
amount of gold that one carries as insurance. I don't see this happening
for some time yet but if they're right then gold will peak about this time.

I think we have four years of significant inflation peaking at about 40% in
2013. This can take the price of gold to $15,000 easily. To some extent
conditions in other countries will matter much more than in the past.

Higashiyama

Cladking -- it is an interesting scenario (inflation peaking at 40 % in 2013)

Although it is a big mistake to think the controls are terribly precise, if we had high inflation from 2011 - 1013, with the memory of 1980-1982 in mind, it might be possible to crush inflaiton and inflationary expectations quickly after that, with the result being that the real value of Federal debt is cut about in half.

7over8

40%----please....

any real inflation will be surpressed by our friends in the Gov't.

rates rising anytime soon - not a chance.

gold continuing to rise - as easy a prediction as you can make. bet the farm.

QE to infinity.

renman95

That's so lo-ball!

percyb

Rates are rising now as the bond market begins its crumbling.

BigE

Gold is going to stay high because no one trusts the government, regardless of what they say inflation is------------BigE

roadrunner

Interest rates rose approx 4% per year during 1978 and 1979. Those would have been the exact worst times to start lowering one's PM's position in response to rising rates. Rates eventually peaked at 21.5% at the end of 1981. It took at least 2 yrs of sharply rising rates before gold finally toppled. And then another 2 yrs for good measure to ensure PM's were dead.

The vast majority of both silver and gold's increases in the 1970's occurred when rates were rapidly rising. Rates were fairly stable prior to 1978 and gold and silver were a small fraction of what they would eventually rise to. The answer was in real interest rates.

roadrunner

percyb

Thanks for the post OPA!

KUCH

<< <i>Interest rates rose approx 4% per year during 1978 and 1979. Those would have been the exact worst times to start lowering one's PM's position in response to rising rates. Rates eventually peaked at 21.5% at the end of 1981. It took at least 2 yrs of sharply rising rates before gold finally toppled. And then another 2 yrs for good measure to ensure PM's were dead.

The vast majority of both silver and gold's increases in the 1970's occurred when rates were rapidly rising. Rates were fairly stable prior to 1978 and gold and silver were a small fraction of what they would eventually rise to. The answer was in real interest rates.

roadrunner >>



RR, so what you're saying is that when interest rates hit their high, we'll have another 4 years after that before gold topples?