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Goldman Sachs Is Probably Understating The Bullish Outlook For Gold Prices

Peter Cooper profile picture
Peter Cooper


  • Gold price yet to reflect mounting problems in China and the EU.
  • The US stock market correction is not yet done. Gold routed stocks in Q4.
  • Gold beat all other assets except silver in the 2009-11 debacle.

Goldman Sachs has already revised its predictions for the gold price for 2019. The Wall Street titan now predicts a good but not great year for the yellow metal, with its price rising a credible 12 percent to $1,450.

Actually, in the present troubled financial markets, it is rather strange that this classic safe haven and portfolio diversifier is not already priced much higher.

Looking Back

Then again, looking back at an article I wrote in late 2009 when Dubai was in $59 billion default and the world looked about to end, I was surprised to see that gold was then only priced at $1,195 an ounce.

But in 2009, the gold price did go up 25 percent. I wonder if that is not a more appropriate benchmark for 2019 than the latest guidance from Goldman Sachs. Could it be that their precious metals’ team would actually agree but house policy does not?

Still, after 2009, all the real action for the yellow metal came in the next two years, with the top in October 2011 of $1,923.

My early support for gold as the most important asset class in that period was completely vindicated. Only silver delivered a better performance within any major asset class, with investors tripling their money.

Could it be that history will at least rhyme, if not exactly repeat itself? For while it is true that economic circumstances in the US are different from 2009, as there is no subprime lending crisis, China’s 250 percent-to-GDP debt load is very worrisome.

Maybe this time round we will see a second Asian Financial Crisis like in the late '90s, only it will be much more significant because China and this region are far more important to the global economy than they were 20 years ago.

Wall Street

This article was written by

Peter Cooper profile picture
Peter Cooper was formerly a partner in AMEInfo.com, forming his company just after the dot-com crash in 2000 and selling it as a part of a private equity deal just before the subprime crisis in 2007. His book 'Opportunity Dubai: Making a Fortune in the Middle East' was a best seller. He was also an early investor in Dubai property. He was a European Commission administrative trainee, and formerly founding editor of both the ArabianMoney newsletter and Gulf Business magazine. He lives in Dubai and Budapest. ‘Escape to Budapest: Moving to Europe’s Coolest Capital’ was published in 2021.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

I agree with your view but I hate the fact that nearly all the SA writers are bullish now. They are nearly always wrong.
One should add the precarious situation of Italian banks and German Deutsche Bank. This will further undermine the Euro in favour of the US$. However in my view gold should disconnect from the US$ because this is the ultimate fiat money.
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