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MarketWatch: Time to Ignore the Gold Bears and Heed the Gold Bugs?

By    |   Wednesday, 22 Jan 2014 10:44 AM

Most investment banks are betting gold will do poorly again this year, but that's precisely why some smart contrarian investors are saying the embattled precious metal could rally, MarketWatch reported.

Gold prices slumped 28 percent in 2013 for their worst showing in 30 years. It was trading at about $1,239.80 per ounce early Wednesday, well off its all-time high of about $1,920 set in 2011.

Target low prices for 2014 from the big institutions are: Bank of America/Merrill Lynch, $1,150; Barclays $1,205; Deutsche Bank $1,141; HSBC $1,292; JP Morgan $1,263; and UBS $,1200.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

Dennis Gartman, publisher of “The Gartman Letter,” told MarketWatch what all of that sentiment adds up to is that it’s “time to be quietly bullish.”

“The analyst landscape is uncommonly bearish. Even the ‘gold bugs’ are neutral of gold and that is stunning, really.”

Steven Kaplan, CEO of TrueContrarian.com expects that with so many leaning in one direction, the unexpected could occur.

Because “financial markets always do whatever rewards the fewest people, a powerful rally in 2014 is therefore extremely likely,” Kaplan predicted. He is calling for gold to charge to a new all-time high in late 2014 or early 2015.

Another noted investor known for fighting conventional wisdom tides, DoubleLine CEO Jeff Gundlach, also has said he expects a gold upswing in 2014.

The Hulbert Gold Newsletter Sentiment Index concludes the average short-term gold timer is recommending that clients put 30 percent of their gold-oriented portfolios into going short, MarketWatch reported.

David Morgan, publisher of The Morgan Report, estimated only about 6 percent of analysts are bullish on gold now, which he predicted “nearly guarantees a bottom.”

He expects gold to achieve $1,700 per ounce in 2014.

Reuters reported that Deutsche Bank, one of the most bearish on gold prices among large institutions, has multiple reasons for its current pessimism.

"We expect gold prices will continue to adjust lower in response to Fed tapering, a stronger US dollar, rising US real interest rates and further declines in US equity risk premium," the bank said, according to Reuters.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

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Most investment banks are betting gold will do poorly again this year, but that's precisely why some smart contrarian investors are saying the embattled precious metal could rally, MarketWatch reported.
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2014-44-22
Wednesday, 22 Jan 2014 10:44 AM
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