Seeking Alpha

BAML moves quickly to cut gold price outlook

  • Not shaken by gold's big start to the year, BAML slashes its price forecast to $1,150 per ounce from a prediction of $1,294 made just six weeks ago.
  • Silver is cut to $18.38 from $26.38.
  • “If investors stopped selling gold, prices could stabilize around $1,200.," says analyst Michael Widmer. "Yet, this is not our base case and a more likely scenario is for investors to continue reducing their exposure. Our model suggest that this could take prices down to $1,000."
  • Another big leg down, however, could be an opportunity for bulls, says Widmer, who muses about "interesting entry points" for the metal this year.
  • GLD +0.2%, SLV -0.1% premarket
  • Gold and silver ETFs: GLD, SLV, IAU, AGQ, PHYS, SIVR, USLV, ZSL, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, DSLV, DBS, DGZ, AGOL, GLDI, DGLD, SLVO, TBAR, USV, UBG
Comments (11)
  • Widmer wrote "investors" but he really means "traders".

     

    A heck of a lot of great economic news over the last several months has had trouble pushing gold under $1,185.

     

    If Widmer saw the following chart he'd quickly change his view on gold in 2014:

     

    http://bit.ly/1a2ZZkJ
    9 Jan, 07:49 AM Reply Like
  • While I respect your opinion and enjoy your comments, I don't agree with the "heck of a lot of great economic news" point of view. I see some improvement but if things were so great the President and Congress wouldn't be fighting over reinstating long-term unemployment benefits. Funny, they just eliminated them in the budget bill two weeks ago.
    From my vantage point here in Oregon, things still look pretty dismal and food prices are increasing dramatically. Businesses are still closing, some that have been around for 30 years. Maybe you are referring to some of the big players in business but the little guys are hurting and they are the real driving force in this country. Wait until the government bails out the insurance industry (a little known provision of ObamaCare) with tax dollars they don't have.
    9 Jan, 12:45 PM Reply Like
  • John,

     

    Thanks for the kind words but I should have been more clear in my post.

     

    I think most mainstream media media sources are in the business of painting a rosier picture of the economy that actually exists.

     

    So "news" and "facts" aren't necessarily the same thing.

     

    This activity started in January 2009.

     

    So the "news" should have pushed gold lower but the "reality" seems to be keeping gold from falling into the triple digits.
    9 Jan, 06:00 PM Reply Like
  • Looks like you are saying that the money supply continues to push the gold:money ratio down, and we are still well in a bull market - eh?
    9 Jan, 07:58 PM Reply Like
  • Long term...yes.

     

    Just like October 1987 didn't mark the end of the 1982 - 2000 bull market I don't think 2013 marks the end of the 2000 gold bull.

     

    The yen, euro, dollar currency printing machines are building mountains and mountains of paper far faster than the world is producing products to buy with that paper.
    9 Jan, 09:37 PM Reply Like
  • Just another Wild Ass Guess.

     

    The gods did not reveal from the beginning
    All things to us; but in the course of time
    Through seeking, men find that which is the better.
    But as for certain truth, no man has known it,
    Nor will he know it; neither of the gods,
    Nor yet of all the things of which I speak.
    And even if by chance he were to utter
    The final truth, he would himself not know it;
    For all is but a woven web of guesses. (Wild Ass Guesses)

     

    Xenophanes
    9 Jan, 09:19 AM Reply Like
  • Another bold prediction, picking targets just under the lows in gold. Is that really a stretch? Why not $1,000 or $950? But to pick a target about $40 from the 2013 closing low? If gold breaks to a new low, and I think it will as I wrote about in my last few articles after this January bounce, then we will test $1,000 and probably break $1,000. Market Makers love to play extremes and until we reach that one extreme that has the gold bulls bleeding, I don't think we have a bottom. Dollar is rising again and I expect that to continue as it has been in a rising trend since it bottomed in 2011. This is also the time that gold started to decline so if the dollar does continue to rise, and Market Makers do what they do, expect some pressure on gold. Silver too of course. And they really didn't go out on a limb on their silver prediction now did they?

     

    http://bit.ly/1ajXzLb
    9 Jan, 09:22 AM Reply Like
  • I totally disagree with the BAML predictions for Gold and Silver prices given in the above article, and it is likely that BAML is simply "talking their book" , namely, they were caught short as GLD accomplished a Breakout above its Double Top on Jan 2, 2014 on its P&F Chart, thus giving a P&F Chart Price Objective of 130.47 , which corresponds to a $1340 Gold price ! Moreover, since the present GLD 200 day moving average is approximately 130 , the upward move to 130.47 would be well above the 200 day m.a. at that time of approximately 125, and would then allow "the pause that refreshes" to back and fill above that 200 day m.a. line ! This near-term move up to $1340 is on the way to achieving the Third-Leg-Up in the ongoing Gold Bull Market starting circa 2000 at $253, according to Elliot Wave Theory, which will carry Gold Price to all-time-new highs; of course , Silver prices will also move up, and Platinum's Premium to Gold -- now at $185 -- will expand to higher numbers due to rising automobile sales and continuing labor strife in South Africa and export restrictions on Platinum Ore from Zimbabwee. The fundamentals driving up Gold prices to new highs have been detailed on my previous Blogs, and include Ms, Yellen's implementation of her "Optimal Control" Policy , and strongly rising worldwide Geopolitical Tensions in Iran vs. Israel, Japan vs. China, Civil Wars in Syria, Iraq, and South Sudan ! Jan 9, 2014 at 9:35 a.m. PST.
    9 Jan, 12:37 PM Reply Like
  • (((While I respect your opinion and enjoy your comments, I don't agree with the "heck of a lot of great economic news" point of view. I see some improvement but if things were so great the President and Congress wouldn't be fighting over reinstating long-term unemployment benefits. Funny, they just eliminated them in the budget bill two weeks ago. )))

     

    John L --- I agree with your statement on the economy - that there's not a lot of great news out there - and the fact that small businesses employ the majority of the workers in America, yet I didn't catch the shifting sands and wind direction of Congresses initial decision on reducing the unemployment benefits. It must be an election year. Obamacare is the nuclear option that has been launched towards our economy and it will have a devastating impact on small businesses after it fully detonates.
    9 Jan, 07:58 PM Reply Like
  • Ebow,
    Thanks for the positive comments.
    The shifting sand with the budget was just a sham. Congress pretended that they were going to pay for some sequestration "cuts" that they were eliminating by reducing unemployment benefits. Harry Reid and Obama said it had to be done and if the Republicans didn't vote for the budget they would be obstructionists. Of course, this was the first budget that Congress had passed in over 4 years. Some years Obama never even presented a budget and the other years Reid didn't allow a vote. Continuing Resolutions meant automatic budget increases for everyone. Not a good thing for our country.

     

    So here were are, a couple of weeks later and Reid is calling the Republicans cold-hearted if they don't reinstate the unemployment benefits.

     

    What does all of this political stuff have to do with our investments? A lot!
    9 Jan, 08:22 PM Reply Like
  • Central Banks will continue to print until fiat money draws its last breath. Who else will fund budget deficits going forward if central banks don't? Which investor in their right mind would buy bonds in a rapidly rising rate environment with most government debt levels already at unsustainably high levels i.e. who in their right mind would catch a falling knife? Why is this not obvious to anyone with a pulse?

     

    Gold.
    10 Jan, 02:28 AM Reply Like
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