Bank of Montreal Says Gold Prices Worth a Look
The case for holding gold continues to get stronger. Mark these words: we may not see $1,300 gold prices in the next few months and quarters; the precious metal could be priced much higher.
The big investment houses are turning bullish on gold. This could bring a lot of buyers to the market. It’s a great news for gold bugs, too!
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Just recently, Bank of Montreal (NYSE:BMO), a major Canadian bank, issued a report in favor of gold prices and gold mining companies.
In the report, BMO analysts said, “Macroeconomic, company fundamentals and valuation all point toward an opportunity for investors to benefit from increased exposure to precious metal equities.” (Source: “’Now Is The Time To Be Looking At Gold’ – BMO,” Kitco News, May 29, 2018.)
The analysts added, “We expect geopolitical risk and growing concerns of surrounding the U.S. economy to keep macro asset allocators interested in gold. This still leaves a potential sweet spot where macro and micro are for once aligned on the positive side for gold.”
Also, guess what? Bank of Montreal expects higher gold prices—$1,327/ounce for 2018—which is four percent higher than what the bank had previously said.
Leading German Bank Calls for Higher Gold Prices
Mind you, Bank of Montreal isn’t the only major bank saying that gold prices could move higher.
Commerzbank AG, a leading German bank, said in its gold prices outlook for 2018, “The gold price is likely next year to continue the rise it commenced two years ago.” (Source: “Commerzbank Forecasts Avg. $1,325 Gold Price In 2018,” Kitco News, December 8, 2017.)
Commerzbank expected the precious metal to trade at an average price of $1,300 in the first two quarters of 2018, and around $1,350 in the last two quarters.
Here’s the thing: the list of banks saying positive things about gold is getting bigger. If a bank is not bullish on the metal, they aren’t bearish either.
Why Do Banks Matter?
First of all, these banks manage a lot of money by themselves. So, if they are bullish on gold, they could increase their exposure to the metal for their own portfolios and they may persuade their clients to do so as well.
Know this: major institutional buyers follow the big banks. If you recall, in 2013, big banks turned pessimistic on gold. Big investors followed their advice and ran for the exits.
So, if we assume that institutional buyers will do the same as the large banks, they could buy a lot of gold.
Finally, big banks turning optimistic entices new investors. This could bring new buyers to the gold market that didn’t even consider investing in gold before.
Gold Prices Outlook for 2018 and Beyond
Dear reader, big banks becoming bullish on the yellow precious metal isn’t a big surprise. Long-term readers of Lombardi Letter can attest that I have been predicting this for a while now.
Big banks forecasting higher gold prices is certainly a good thing; they have a lot of influence in the markets.
For the rest of 2018 and beyond, I remain bullish on gold.
I continue to take the stance that gold could reach toward $2,000 much faster than currently expected. We could see this happen in a matter of a few years. And, as gold prices soar, gold mining stocks could become the next “millionaire maker” investments.
