Big Banks to Send Gold Prices Soaring
In 2013, gold prices plummeted. For those who remember, it was a rigorous sell-off. It almost appeared as if the precious metal wouldn’t find any support and would continue to drop.
Why did this sell-off happen? Big banks came out against the yellow precious metal. They said gold wasn’t worth owning. They also predicted that gold prices would go much lower. It was called a pet rock.
Now, we are seeing something interesting happened. Not surprising, but interesting.
The banks that went all out against gold are now favoring the precious metal. And the list continues to get bigger every day.
One of the banks that had very bold calls for gold prices was Goldman Sachs Group Inc (NYSE:GS).
In 2013, Goldman Sachs said gold was a “slam dunk sell” and set a gold price target of $1,050. (Source: “Goldman Sachs: Gold is a ‘slam dunk sell’,” CNBC, October 14, 2013.)
Just recently, Goldman Sachs released a report that was in favor of holding gold in modern portfolios. It said that gold is a better investment than cryptocurrencies because it has the characteristics of money.
Also Read: The Gold Price Forecast 2018 Might Surprise You
The bank said, “Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield.” It also added, “They are neither a historic accident or a relic.” (Source: “Goldman Sachs Says Gold Is Better Than Bitcoin,” Bloomberg, October 17, 2017.)
Why Do Big Banks’ Opinions Matter?
You see, big banks have a lot of influence on investors. Go back to 2013, for example, and you’ll see that investors started to ditch gold as big banks turned bearish. In fact, one could even say that the sell-off escalated as banks posted their dire outlook.
As I have written previously in these pages, big banks seeing a sudden change of heart towards the precious metal shouldn’t be taken lightly. Goldman Sachs is not the only one. It is well documented in these pages that other banks are starting to like gold as well.
This is big. It could cause investors on the sidelines to jump back into the gold market. Banks liking gold gives their confidence a boost.
Now, let me ask one question. What do you think will happen once investors jump back in to buy gold? While we are at it, remember that the demand for the yellow metal is already surging and the supply side is struggling.
It will be interesting to see what happens when investors jump in to buy. It’s possible to see gold prices spiking higher.
Looking all this, I am not ruling out $2,000+ gold prices in the next few years just yet. Big banks like Goldman Sachs seeing gold in a positive light only strengthens my take on gold. Let me make it very clear, I am not surprised by what the banks are saying about gold. I expect more banks to do the same.
The yellow precious metal could definitely be worth holding in a portfolio. It’s an insurance policy for portfolios. It’s one of the best fiat money alternatives and it’s a great hedge against uncertainty.