Gold’s number one bear Jeff Currie, the Global Head of Commodities at Goldman Sachs, this week defended his call for much lower gold prices, even restating his target of $1000 by year end. Goldman Sachs is predicting that the Federal Reserve will increase U.S. interest rates no fewer than three times this year.
In a report issued on February 9, 2016, analysts including Jeffrey Currie and Max Layton wrote: “Our economics team forecasts that the Fed will raise rates by 25 basis points three times this calendar year, to 1.3 percent.” Nonetheless, the US economy will still grow above-trend this year, boosting inflation expectations, according to the Goldman report. In their view, higher interest rates will curb bullion’s appeal because the metal doesn’t pay interest like other assets such as bonds.
The report says faster economic growth, as well as expectations for consumer-price gains, are “forecast to result in an increase in U.S. real interest rates, which under our gold framework is set to drive gold prices down to about $1,000 by year-end,” the analysts wrote.
One of the greatest dangers facing small investors is listening to the big bank propaganda machines.
There is no way to know exactly what Goldman Sachs really thinks or what is actually in its interests. In my opinion, gold is now in a major, multi-year bull market. Get on board. If the Fed raises rates three times this year, send me your hat and I will eat it.