Gold bulls run rampant as BofA says $1,550 a possibility
With gold carrying out a major move to one-year highs above $1,260 Thursday as fear gripped global markets, some high-profile investors are coming out of the woodwork to endorse bullion, including billionaire Mark Cuban, the owner of the Dallas Mavericks.
When traders dont know what to do, they go where everybody is, and I thought that was a good chance that would be gold, Cuban told CNBC.
Some top technicians and executives from major investment banks also have been forced to acknowledge bullions rekindled bull-market power.
And why wouldnt they? With even Federal Reserve chief Janet Yellen admitting that the central bank is considering the prospect of negative interest rates in the U.S., the case for safe-haven hard assets is the strongest its been since the 2008-09 financial crisis.
BofA targeting $1,315+: Just days after one of its most high-profile metals analysts set a now-timid-looking year-end target of $1,250 for gold, Bank of America technical strategist Paul Ciana has issued this note indicating hes staying long gold:
Gold prices are breaking above triple resistance forming a technical bottom and channel breakout. This projects gold higher to 1,315 and 1,375. The gap in the distribution on the left shows 1,550 is a possibility, though we are not making that our target at this point. We remain long gold on a technical basis.
JPMorgan sees more faith in gold than paper: Meanwhile, following up on recent bullish comments from a JPMorgan colleague that the case for gold has improved significantly, Bob Michele also chimed in on CNBC.
The global chief investment official and head of JPMorgans fixed-income, currency, and commodities group made this stunning observation: Gold at $1,200 an ounce, what does that tell you? It tells you that in a flight to quality, in a safe haven, people have more confidence in gold than in bank deposits or paper money. I think things have gotten out of control.
Goldman says much higher than $1,200: Even Goldman Sachs, which has been notably bearish on bullion for quite a while, issued this head-turning reversal via a technical note:
From a wave count perspective, the market is likely in the initial stages of a counter-trend ABC correction which could eventually retrace ~38.2% of the 5-waves from 11 to 1,381. From a pure techs perspective, breaking from a declining wedge wouldinitiate a medium-term target back at the start of the pattern ~1,392.
Bottom line, although 1,200-1,202 might hold in the near-term, theres scope to extend much higher over time.
Lines around the block in London: And it seems that an increasing number of the general public and retail investors arent waiting for stocks to turn around. Londons Telegraph newspaper is reporting that gold buyers are queuing round the block there. One major dealer said that the bullion market has been building with interest since the end of last year but this morning things have gone bananas. Some bankers in London are placing unusually large orders for physical gold."
Recall the lesson that many investors learned during the 2008 financial crisis: Just as in 2008, if todays stock-market collapse continues, you likely will have a very short window in which to buy bullion assets at reasonable market prices. After that window closes, it will become much more expensive and difficult to help you safeguard your assets with gold.