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Welcome Catalyst Goldman Sachs Turns Upbeat on Gold Price for 2017 - Duration: 4:58.Perpetually Bearish Investment Bank Surprisingly Turns Positive on Gold Price
No, hell hasn't frozen over.
Nor has Bigfoot been spotted.
But an equally rare event has transpired: Goldman Sachs Group Inc (NYSE:GS) has turned
bullish in its gold price forecast.
Yes, I did a double-take as well.
The huge investment bank issued a rare positive take on gold, citing three specific factors
which which could offset rising interest rates in 2017.
The bank raised its three-month, six-month, and 12-month price targets from $1,200, $1,180
and $1,150 to $1,260, $1,261 and $1,250 per ounce, respectively.
That won't exactly set investors' hair on fire.
But, considering Goldman's permabear status regarding the yellow metal, it's a start.
The factors that Goldman Sachs cites are: 1.
Low expected returns on U.S. equities, which should support more defensive asset allocations;
2.
Accelerating emerging market (EM) gross domestic product (GDP) growth, which would give more
purchasing power to EM nations that favor gold ownership; and
3.
Expected mine supply peaking in 2017.
Regarding point number one, I wonder if the "low expected returns" that Goldman Sachs
anticipates is some sort of stock market crash.
It would seem that low returns wouldn't necessarily be enough to drive investors to
own gold, unless a stock market crash or a prolonged stock market correction was in the
offing.
Regardless, Goldman Sachs points out that, since 2002, gold's correlation with global
bonds is at the 100th percentile, and should be sensitive to rising rates, along with bonds.
Goldman's second reason is self-explanatory.
When EM economies expand, they'll have more fiscal headroom to initiate gold purchases
through their central banks.
It will be interesting to see how much extra gold tonnage EMs purchase if Goldman's expected
GDP acceleration occurs.
Regarding the third point, the concept of "peak gold" is an interesting one.
Last year, Goldman Sachs analyst Eugene King estimated that the world had only "20 years
of known mineable reserves of gold."
If his prediction is accurate, the last known gold reserves could be mined sometime in 2036.
In any event, "peak gold" is real, and it will act as a long-term put on prices.
The fairy tale of Rumpelstiltskin, in which the miller's daughter could turn straw into
gold, cannot be duplicated in the real word.
The days of two percent annual global gold production are a distant memory.
Did Goldman Sachs Change its Tune?
It was only in early May 2017 that Goldman Sachs issued a three-month target of $1,200/ounce
gold.
Citing a repricing of U.S. interest rate increases, faster quantitative easing reduction, and
a decent U.S. economy, near-term gold price pressure was expected.
Granted, this was only a short-term price objective, and Goldman's 2017 forecast has
remained steady, at $1,250/ounce gold.
But clearly, something has changed.
Does Goldman Sachs see degradation in the real economy that could cause investors to
rush into gold?
Such economic degradation could easily lead to equity markets liquidating in a disorderly
fashion, with valuations at nosebleed levels.
But don't take my word for it.
In its March 2017 minutes released to the public, Goldman Sachs stated, "Some participants
viewed equity prices as quite high relative to standard valuation measures."
Equity markets are priced for perfection right now.
If the economy slows down faster than anticipated, as signaled by a rapidly flattening yield
curve, the stock market could be in trouble.
Perhaps Goldman Sachs is reading the tea leaves, and is positioning its clients ahead of the
curve by recommending gold.
Is Goldman's new bullish stance positive for gold?
Maybe, maybe not.
But, at the very least, it's noteworthy.
Goldman Sachs is rarely positive on gold, so—if I'm reading between the lines correctly—I
sense there's something in the economy or the stock market that they find imminently
foul.
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Safe Haven Reputation Buoys Gold Price Forecast for Q3 2017 - Duration: 5:03.Rediscovery of Safe-Haven Asset to Drive a Higher Gold Price Trend
Gold has a momentum problem.
Stuck smack-dab in the middle of a five-year price range, it's been sputtering for a
long time now.
And, to be honest, with quantitative easing (QE) winding down, a relatively "okay"
economy, and much higher returns found in equities, there hasn't been much of a reason
to own gold lately.
But, as Bob Dylan once sang, "the times they are a-changin"—words that could be
quite apropos for gold bugs soon.
My gold price forecast for Q3 2017 recognizes the winds of change, which are just beginning
to get whipped up.
So what are these "winds of change" that I speak of?
Hidden beneath the morass of back-and-forth price action is the fact that gold prices
have held up in "decent" economic conditions.
One would expect that, with very low unemployment, low inflation, and a weakening U.S. dollar
(USD), the price of gold would be falling.
But gold prices are hanging in, even if they are stuck in neutral.
In my gold price forecast for 2017, I see clear positive catalysts that could allow
gold prices to break free.
For one, the ridiculous valuations ascribed to equities (the cyclically adjusted price-to-earnings
(CAPE) ratio recently moved above 30!) lend themselves to a major correction.
Should this correction become a firestorm, odds are that gold will again see flight-to-safety
interest by investors.
Hundreds of billions of dollars have flowed into tech stocks and exchange-traded funds
(ETFs) over the past nine years, and the money not removed from the market will need a safe
place to go.
Precious metals (and some alternative assets like cryptocurrencies) will likely absorb
much of this safe-haven money.
There are also signs that a recession looms in the not-too-distant future.
Should equities get crushed, a new round of stimulus or QE is likely to materialize.
While it's debatable how effective government intervention will be this time around, the
U.S. dollar is likely to get crushed if the intervention is large enough.
A lower dollar (especially if it stokes domestic inflation) will support gold that is priced
in USD, and also support everything else along the commodity complex.
Of course, geopolitical risk keeps ramping up at a frenetic pace.
The stock market hasn't paid much attention while climbing the "wall of worry," but
this may change along with shifts in sentiment.
Once volatility—as measured by the volatility index (VIX)—starts veering into higher ground,
the market will pay more attention.
North Korea, Syria, Ukraine, and the South China Sea are all major flashpoints with the
potential to escalate quickly.
I predict that the new buzzword when equity-market calamity strikes will be "rotation."
As in, sector rotation into over-inflated and crashing equity prices, as well as into
safe-haven assets like gold.
There are many reasons for this.
All that's needed is the trigger.
Analysis of Gold Prices for Q3 2017
Although brighter days may be approaching, it won't be clear sailing.
While the odds of a recession are creeping up, along with a flattening yield curve, a
recession isn't a given.
Even if a recession does come, it may not materialize until 2018, so the gold price
trend may languish further.
A test of $1,200/ounce (or perhaps $1,060/ounce) is a distinct possibility if the economy appears
more resilient than many expect.
There's also the risk that Donald Trump somehow unites Congress and pushes through
pro-business policies like corporate tax cuts and offshore capital repatriation, which would
help economic growth.
That looks unlikely now, but it's a possibility.
Anything that keeps the economy flowing, even at stall-speed, won't encourage institutional
money to dive in.
Without institutional money, paper gold can, and will, be capped and maneuvered in place.
My Gold Price Forecast for 2017
In summary, my gold price forecast for 2017 reflects my belief that the catalysts I've
mentioned will gradually take hold.
If not in Q3 2017, then somewhere shortly down the line, I see $1,500/ounce gold.
The time is coming when the market will once again re-discover gold's amazing capital-preserving
characteristics.
I believe this will coincide with a sizable market decline and a falling U.S. dollar (due
to more stimulus spending).
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Coffee & News | Family: The Cutest, Leak-Proof Lunch Boxes for Kiddos - Duration: 4:06.Coffee & News | Family: The Cutest, Leak-Proof Lunch Boxes for Kiddos
We know it's hard to toss your three-year-old Tupperware.
But if you free yourself of those slightly discolored, bent plastic containers, your kitchen will be so much less cluttered and you'll have an excuse to buy one—or three—of these super-cute, leak-proof lunch boxes.
We tested a whole bunch of popular options to find the ones that won't spill soup all over the inside of your kids' backpacks.
They're lightweight and easy for little ones to use, although you might be tempted to borrow for your lunch al desko.
OmieBox Available in five bright colors, this brilliantly designed box has two different temperature zones: one that keeps foods warm and one that keeps them cold until lunchtime. So you can pack chicken noodle soup plus a side of fruit and veggies.
Zoo Lunch Kit This BPA-free, dishwasher-safe container has clips that are designed for little hands to open and a rubber seal that locks the tight-fitting lid in place to prevent spills.
Take your pick between an adorable owl, monkey, ladybug, dog, bumblebee, giraffe or butterfly.
Children's Bento Lunch Box Tons of compartments are perfect for packing nutritious combos and a removable tray is extra-easy to throw in the dishwasher.
Stash a half sandwich or salad in the large compartment, a few sides in the medium three and dipping sauce in the center. Bonus: Every purchase supports Feed the Children. Bentgo ($15).
Splash Box and Pods Set A fantastic plastic-free option, this set includes steel pods that nest together when you're not using them to save space. Flexible silicone lids are easy to remove but keep everything inside, even soup.
MB Tresor This compact is BPA-free and pretty darn safe (microwave, dishwasher and freezer).
What we love the most? The fact that we can pick the color of every part of the box, from latch on the outside down to the containers that stack inside.
Your kids customize it even further by swapping between fun decals. Montbento ($29).
Mackenzie Hot & Cold Containers Baby boy will gobble up his minestrone soup if you pack it in this adorable, sleek, BPA-free thermos, which keeps food hot or cold for up to six hours.
Pick from 38 different patterns and monogram it if you'd like. Mackenzie ($20).
Rover It's a favorite among mommy bloggers, and not without good reason. The wide, shallow compartments make assembling a fun, colorful lunch medley easy.
Little ones will enjoy mixing and matching magnets that stick to the outside. (Oh since we know you're wondering, Yes, it's dishwasher safe.) PlanetBox ($56).
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