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In times of economic uncertainty, commodities are often viewed as a safer investment alternative to stocks, serving as the foundational materials that drive societal functions. However, a recent report from Goldman Sachs indicates that the current landscape poses significant risks for many popular commodities, with gold emerging as the premier safeguard against value erosion.
Analysts at Goldman Sachs assert, “We strongly believe in the diversifying role of commodities in investment portfolios based on several structural drivers, including commodities’ hedging role against supply disruptions, not an uncommon occurrence in energy, and the potential for sharp rallies in select industrial metals driven by a combination of long supply cycles and structural green metals demand growth associated with energy security and decarbonization investment.”
Despite this belief, the firm has decided to recalibrate its strategies in light of a softening cyclical environment. “However, given the current softening cyclical environment, we opt to tactically close our 2024 Deficits Basket trading recommendation with a potential gain of 8% and focus on our highest conviction views in the current environment, namely higher implied oil volatility, long gold and short long-dated European gas,” the analysts noted.
The surge in gold purchases by central banks has been remarkable, with the Kobeissi Letter reporting, “Global net gold purchases by central banks reached 483 tonnes in the first half of 2024, the most on record.” This figure represents a 5% increase over the previous record of 460 tonnes set in the first half of 2023.
In the second quarter of 2024, central banks acquired 183 tonnes of gold, reflecting a 6% year-over-year increase, although this was 39% lower than the 300 tonnes purchased in the first quarter, as highlighted by the Kobeissi Letter.
Goldman Sachs remains optimistic about gold’s prospects, stating, “Gold stands out as the commodity where we have the highest confidence in near-term upside.” The firm has set a bullish target of $2,700 per ounce for early 2025, driven by three key factors.
First, the analysts believe that “the tripling in central bank purchases since mid-2022 on fears about US financial sanctions and US sovereign debt is structural and will continue, reported or unreported.”
Second, they anticipate that “imminent Fed rate cuts are poised to bring Western capital back into the gold market, a component largely absent of the sharp gold rally observed in the last two years.”
Finally, they emphasize that “gold offers significant hedging value to portfolios against geopolitical shocks including tariffs, Fed subordination risk, and debt fears.”
Their analysis suggests a potential upside of 15% in gold prices should financial sanctions rise similarly to the increases seen since 2021, or if US CDS spreads widen by one basis point. “That said, due to the particularly price-sensitive Chinese market digesting the recent price rally, we have adjusted our $2,700 target to early 2025 vs year-end 2024 previously. However, we believe that that same price sensitivity also insures against hypothetical large price declines, which would likely reinvigorate Chinese buying,” the analysts added.
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The Kobeissi Letter raises an intriguing question: “Why are central banks calling for a ‘soft landing’ while stocking up on gold?”
As Goldman Sachs maintains its bullish outlook for gold into late 2024 and early 2025, the ongoing demand from central banks is expected to further bolster prices. However, the yellow metal must navigate through September, historically a challenging month since 2016.
With governments around the globe continuing to print debt at unprecedented levels, the prospects for gold remain strong. “But with governments worldwide continuing to print debt like there is no tomorrow, there’s a strong chance that the strength shown by gold in the first half of 2024 will continue in the second half and beyond as the primary result of debt printing is currency debasement,” the Kobeissi Letter concludes.
As the economic landscape evolves, gold’s role as a protective asset appears more critical than ever.
Diddy Charges and Arrest Beg the Question: What Other Elite Hollywood Celebs Knew About ‘Freak Offs?’
by Outkick
Puff Daddy is finally facing the mother of all karma for his alleged sick and twisted behavior spanning a decade or more. At yesterday’s press conference, reporters asked the attorney why it took so long to get these charges and that’s a great question. Fs Sot 3 (5) Here’s another…
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by Natural News
U.S. Vice President Kamala Harris has falsely claimed that her grandfather was a freedom fighter in the Indian independence movement. The Democratic presidential nominee shared on Sept. 8 a picture of herself in India with her maternal grandfather P.V. Gopalan. She described him as a “retired civil servant who had…
What Did John Brennan Know?
by Frontpage Mag
In the wake of the second attempt on his life, Donald Trump flagged the “highly inflammatory language” Democrats have deployed against him, such as the charges of Joe Biden and Kamala Harris that the former president is a threat to democracy and so forth. When it comes to inflammatory language…
Are the White House and Pentagon Controlled by a Shadowy Few?
by Zero Hedge
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Do We Have Another Instance Where the Secret Service Can’t Get Its Story Right?
by Townhall
Former President Donald Trump was nearly assassinated on September 15 while golfing in West Palm Beach. The former president’s trip to Trump International Golf Club was not planned, but would-be assassin Ryan Wesley Routh was waiting on the course, hiding in a shrubbery for 12 hours with a rifle and…
City Demands Pastor Take Down ‘Jesus’ Sign in Front of Church, Gets Epic Response From Him During Sermon
by Western Journal
Freedom-loving Americans cannot help but bemoan the mounting authoritarianism of both federal and state officials. As we discovered during the COVID era, however, sometimes Satan infects even our neighbors with the spirit of petty tyranny. In a clip posted Tuesday to the social media platform X, Pastor Mark Driscoll of…
Leftists Deserve the J6 Treatment
by J.B. Shurk
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Professor Teaches Students About Evil by Having Them Read Writings of Hitler’s Chief Propagandist
by Red State
A professor at the University of Austin ingeniously teaches students about “good and evil” by having them read the writings of some of the 20th century’s most evil people, including Adolf Hitler’s chief propagandist, Joseph Goebbels. Spoiler: I think it’s absolutely brilliant. Professor Marietta, who says Goebbels used “emotional appeal”…
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by S.D. Wells, Natural News
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Fan in MAGA Hat Denied Entry at Arizona Cardinals’ Home Stadium Unless She Threw It Away, Prompting Apology From Team
by The Blaze
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New Report: State Department Funded Fact-Checkers to Censor ‘Lawful Speech’
by Michael Nevradakis Ph.D., The Defender
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Springfield City Manager Admitted in March He’d ‘Heard’ About Haitian Migrants Eating ‘Domesticated Animals’
by The Post Millennial
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Did the Government Shield Diddy Like Epstein?
by Daily Wire
Some of the most revealing moments from the sordid saga of Jeffrey Epstein came when government officials were asked direct questions, then ducked them without any real explanation. Case in point: Five years ago, the Labor Secretary at the time, Alex Acosta, was speaking to reporters about his handling of…
Saudi Arabia Won’t Recognize Israel Without Palestinian State, Says Crown Prince
by End Times Headlines
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Retired Border Patrol Chief Accuses Joe Biden, Kamala Harris of Attempting to Hide Mass Release of Migrants Into U.S.
by Breitbart
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by Michael Snyder
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