(Newsmax) Major Investment Banks Are Becoming More Bullish on Gold

(Newsmax)

Image: Major Investment Banks Are Becoming More Bullish on Gold
Over the July 4 weekend, the precious metals rose dramatically higher.  Even though the U.S. markets were closed, the London pm settings were $1,350.75 for gold, $20.36 for silver and $1,066 for platinum. That’s the highest London gold fix since March 14, 2014 and the highest silver price since July 31, 2014.  Despite this dramatic price increase over the weekend, the media is strangely quiet about this latest surge.

Gold’s rapid rise in the aftermath of the surprise Brexit vote caused more major investment banks to raise their target for gold for the second half of 2016. Here are a few samples of their “late conversion” to gold.

  • HSBC sees $1,400 gold ahead: James Steel, chief precious metals analyst with Britain’s giant HSBC Bank, said “We anticipate a sizable ‘safe-haven’ inspired trade in gold following the U.K.’s vote to leave the EU and gold prices to rally significantly to reach $1,400 per ounce… In periods of uncertainty, gold is often one of the few perceived ‘safe-haven’ assets with liquidity. It is also historically negatively correlated with risk-on assets.” Steel added that “the drive higher may be more than 10% in the longer term if there were to be broader concerns about the future direction of the EU after the vote.”
  • Credit Suisse says gold could touch $1,500 by 2017.  In a report released last week, Credit Suisse said that “we think this recent fear trade leads to something more enduring as the surprise Brexit vote has solidified and intensified macro and political uncertainty and extended the time frame for a negative real rate environment in the U.S. and potentially abroad.” The bank projects gold averaging $1,475 in the fourth quarter and $1,500 in the first quarter of 2017.  They also “expect mine supply to decline over the next three years,” amidst rising demand from exchange traded funds and hoarding of gold bars and coins.
  • Societe Generale raises its Target to $1,330 in the third quarter and $1,350 for the fourth quarter, targets that have already been met by July 4th! Looking ahead, they say, “it seems that gold will remain one of the major beneficiaries in the current backdrop, as heightened volatility and lingering uncertainty will keep investors’ risk appetite in check.”
  • Saxo Bank: Gold ready for “next leg higher.” Saxo Group gold trader Serge Berger says the Brexit bump for gold could be just the start of a longer-term bullish run for the yellow metal, noting that “safe-haven assets like gold are getting a boost and barring any dramatic reversal of this initial reaction to the referendum, gold may now be ready for its next leg higher.” Berger points to technical indicators of a breakout from the multi-month trading range suggesting that gold has overcome resistance.
  • Australia & New Zealand Banking Group expects $1,400 gold – ANZ figures gold bullion could rally to $1,400 over the next 12 months, since “the ensuing political crisis in the U.K. and concern about the very future of the EU should keep investors on edge.”
  • Overseas Chinese Bank Corp sees $1,400 gold.  OCBC economist Barnabas Gan said “With U.K.’s exit from the European Union, we expect the risk-off sentiment to persist into the months ahead. OCBC targets gold at $1,350 with a single US rate hike, $1,400 if there is no rate hike this year.
  • Even Goldman Sachs raises its gold forecast – And finally, even the most bearish-on-gold big bank, Goldman Sachs, has been forced to raise its outlook for gold by $100.  Goldman’s new three-, six- and 12-month targets are $1,300, $1,280, and $1,250.  It looks they’ll be chasing the gold price all year long.

U.S. Mint Bullion Coin Sales Rise Sharply in the First Half of 2016

Sales of the American Eagle silver and gold coins rose strongly in the first half of 2016 vs. the same six months in 2015.  Silver American Eagle coin sales rose by 20.5%, from 21,786,000 ounces in the first six months of 2015 to 26,250,000 ounces in the first half of 2016.  Gold Eagle sales were up 83.5% for the same six months, rising from 273,000 ounces in the first half of 2015 to 501,000 oz. in 2016’s first half.