Money managers are getting nervous about gold: Morning Brief
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Gold bulls everywhere, but pros are getting worried it’s now overvalued
GC=F) has been one of the better performing assets this year, going above $2,000/oz this week again after falling from its all-time highs last week.
Jeffrey Gundlach said in a recent webcast.
forces gold bulls warn of seem to be pointing in the right direction: ultra easy monetary policy, massive federal spending, a weak dollar, and concerns that all this means inflation down the road.
perfect storm” for the precious metal.” data-reactid=”27″>Credit Suisse analysts recently raised their price target on gold to $2,500/oz, calling the whole narrative a “perfect storm” for the precious metal.
“We see plenty of upside on the gold price and view the correction as a buying opportunity,” Credit Suisse’s Andrew Garthwaite wrote on Friday. “We think policy stays loose (especially fiscal) until unemployment falls to much lower levels in the US, which this time around generates some inflation…”
Furthermore, they see demand rebounding from both consumers and institutions.
“Nearly half of gold demand is jewelry and this fell 46% in 1H but is likely to recover as GDP recovers,” Garthwaite added. “Central banks account for 15% of gold demand and their purchases fell by nearly 40% in 1H. We think central bank buying will increase sharply.”
BRK-A, BRK-B) taking a stake in gold miner Barrick Gold (GOLD). The move surprised many as Chairman Warren Buffett and Vice Chairman Charlie Munger have publicly trashed gold for years.
All that said, the pros are starting to get worried.
long U.S. tech stocks).
And so, maybe gold isn’t as attractive as it was a month ago. Even gold bulls like Gundlach expect there to be more “short-term reversals.”
remains bullish for gold.
@SamRo” data-reactid=”47″>By Sam Ro, managing editor. Follow him at @SamRo
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