Goldman Sachs says investors should go long on commodities, sees 20% upside, writing private letter to wealthy clients saying now is the time to buy Gold.
Central bank emergency measures push traders towards ‘currency of last resort’
Gold continued to push higher on Tuesday as a recent wave of selling dried up and Goldman Sachs told its clients the time had come to buy the “currency of last resort”.
“We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policymakers act to accommodate shocks such as the one being experienced now,” said Jeffrey Currie, head of commodities at the Wall Street bank.
As well as being seen as a hedge against all kinds of market volatility, gold is viewed by many investors as a way to protect themselves from the debasement of currencies and also inflation.
“It’s just like in 2008 and 2009 when governments and central banks turned the printing press on full speed,” said John Ciampaglia, chief executive of Sprott Asset Management.
Traders said gold has also been boosted by a weaker US dollar and other measures taken by the Fed — in particular the opening of swap lines with other central banks to boost the availability of dollars in the financial system. A weaker dollar is thought to be positive for gold because it lowers the cost of buying the metal for the holders of other currencies.
“Fiscal policy can take various forms and we do not rule out direct ‘helicopter money’ type interventions at all. As such, we could not imagine a more bullish environment for gold prices,” he said.
