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Analysts At Goldman Sachs Are At It Again

Analyst, Author, and Owner of Kelsey's Gold Facts
May 4, 2022

Analysts at Goldman Sachs are now predicting that recession “will push gold to $2,500”. That is an increase of 32% from current levels.

How much confidence can one have in this latest proclamation? Not much; for several reasons.

The justification for lowering their previous target from $2300 oz. had to do with “a continuing global recovery and only moderate inflation”.

A year before that, Goldman announced that it was raising its projection from $2000 oz. to $2300 oz. due to “a potential shift in the U.S. Fed toward an inflationary bias against a backdrop of rising geopolitical tensions, elevated U.S. domestic political and social uncertainty, and a growing second wave of COVID-19 related infections.” 

Now, we are supposed to believe that the gold price will exceed all previous forecasts by Goldman, but for different reasons; reasons which keep changing?

GOLDMAN IS WRONG ABOUT RECESSION PUSHING GOLD HIGHER 

A recession is an economic event. Economic events or activity of any kind have nothing to do with the price of gold.

A higher price for gold is due to the loss of purchasing power in the US dollar. Without the actual loss in purchasing power over the past century of ninety-nine percent, the gold price would be much lower.

For example, if the actual loss in US dollar purchasing power was closer to ninety-eight percent, then the gold price would be closer to $1000 oz.

Even casual observations about gold and inflation, however flawed they may be, seem to fly in the face of Goldman’s expectation for a higher gold price due to recession.

GOLDMAN AND GOLD DON’T GO TOGETHER

Finally, predictions and proclamations by Goldman Sachs regarding gold and the gold price are conflicted and faulty…

“In late July 2020 during an interview with CNBC, the chief investment officer of private wealth management at Goldman Sachs made the following statement:

“Our view is that gold is only appropriate if you have a very strong view that the U.S. dollar is going to be debased. We don’t have that view… So all this excitement and brouhaha about gold is not something that we buy into.” …Sharmin Mossavar-Rahmani

Ironically, Ms. Mossavar-Rahmani’s statement was made just after a team of commodity analysts at Goldman raised their 12-month forecast for gold to $2300 from $2000 (same projection cited previously in this article).”

Regarding gold, who speaks for Goldman Sachs?

GOLDMAN RE: GOLD – LOUSY TRACK RECORD

Goldman Sachs has a poor track record when it comes to predicting the gold price.

Probably the most egregious example occurred after the post-2011 gold price peak of $1895 oz…

The gold price should continue to climb in 2012… with the price forecast to hit $1,940 from today’s $1,607.” 

Following that officious pronouncement, the gold price continued its decline to a low of $1049 oz. in December 2015.

RECOMMENDATIONS RE: GOLDMAN’S GOLD PRICE PREDICTION 

There are three things you can do if you have questions about Goldman’s latest prediction for the gold price.

  1. Ignore it.
  2. Do your own research.
  3. Both of the above.

(also see Why Is Goldman Still Looking For $2k Gold? and Barrick and Buffett; Gold And Goldman)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

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Kelsey Williams has more than forty years experience in the financial services industry, including fourteen years as a full-service financial planner. His website, Kelsey's Gold Facts, contains self-authored articles written for the purpose of educating and informing others about gold within a historical context. In addition to gold, he writes about inflation and the Federal Reserve.

Kelsey is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN'T, AND WHO'S RESPONSIBLE FOR IT and ALL HAIL THE FED! 

Kelsey Williams is available for private consultations, public speaking, and interviews at [email protected]


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