Northern, WI 12/6/2012 (BasicsMedia) – Gold began it’s rally the day that the U.S. Government passed the Troubled Asset Relief Program (T.A.R.P) program. In hindsight, Cash$Gold sensed that we would have a fiscal cliff on the back of TARP and the shiny metal was right on the money. Over the next 2 years the metal itself outperformed every asset on the planet by leaps and bounds. Gold (NYSE:GLD) may be telling us that the Fiscal Cliff will not be as bad as the last 4 years and do what you need to do to sidestep a bubble that will eventually burst.
Gold tell’s us this by making an all time high here and then turn lower for a protracted 3 – 5 year cycle and fall fast and hard enough where the metal experiences a retest (and close below) the important $1000 per ounce support level on the London Gold Fix. It should be very easy to determine the future effects of the fiscal cliff by watching what Gold (NYSE:GLD) does and – is doing – and if Gold goes down it’s great for the economy. Gold should go down….and we will all be happy.
Goldman Sachs (NYSE:GS) lowered its gold price targets over the next 3, 6 and 12 months to $1,825, $1,805 and $1,800 per ounce, respectively. It also introduced a $1,750 per ounce 2014 forecast. downgraded its outlook for gold prices, citing stronger U.S. growth in the second half of next year. The investment firm explains in a client note, “Medium term however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in U.S. real rates on better U.S. growth. Our expanded modeling suggests that the improving U.S. growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013.”
It’s pure irony that back when an Ex- Goldman CEO Hank Paulsen finished the TARP transaction the Goldman Prop desk was advising it’s clients to be long Gold and it’s somewhat reassuring that they are now advising clients via this forecast that it’s time to exit this 4 year long cycle, and they are clear that they believe the SuperCycle in commodities (metals included) is not over…but they single out speculative metals and are trying to be ahead of the curve in exiting this overdone bubble…those who are long Gold will experience what many metal speculators have learned in history…when metals fall…they fall hard and fast, and you have no where to go. If you don’t believe me ask Nelson Bunker Hunt and his brother Wilber about a Silver trade.
Disclaimer: We have no position in any stock mentioned here, nor are we giving advice on any directional trade in in any stock or metal.