“Gold Is a Great Hedge Against Politicians” – Goldman Sachs
Goldman Sachs is the most prominent bear in the gold market. However, in recent weeks there is a marked change in their tune; and they are now bullish on gold in the medium and long term. They are concerned about further price weakness in the short term as we run into year end, but believe this will be a buying opportunity.
Goldman says that the precious metal will be good to own in an environment of “political uncertainty” ahead of the November elections.
Head of Commodities Research Jeff Currie says \ that it is good to own gold in our current political state.
In a recent note, Goldman analysts Max Layton, Mikhail Sprogis and Jeffrey Currie wrote:
“Indeed, we would view a gold sell-off substantially below $1,250 an ounce as a strategic buying opportunity, given substantial downside risks to global growth remain, and given that the market is likely to remain concerned about the ability of monetary policy to respond to any potential shocks to growth.”
The bank also believed Chinese investment demand for gold may pick up after the current selloff, particularly from medium to long-term asset allocators.
“The potential drivers of increased Chinese physical buying include purchasing gold as a way to hedge for potential currency depreciation in the face of capital controls, and purchasing gold as a way of diversifying away from the property market, which has this year to date had a remarkable rally (with the government moving to rein in speculation and price growth),” the analysts added.