After gold's first annual decline in the last 13 years, many on Wall Street are "piling on" gold with a series of flat-to-negative predictions for gold in 2014.
In typical Wall Street fashion, they usually predict that the current trend will continue for the foreseeable future. When gold was rising, they predicted higher prices. When gold is falling, they tend to predict more of the same.
Here are some examples: Goldman Sachs sees a "significant" (15 percent) decline in gold for 2014. JPMorgan Chase just reduced its 2014 forecast by 10 percent, from $1,400 down to $1,263. Morgan Stanley sees an average $1,313 in 2014, and Scott Nations, president and chief investment officer at NationsShares, sees gold's true value in 2014 at closer to $1,000 per ounce. Expressing Wall Street's bias against gold more candidly than most, Nations told CNBC on Dec. 23 that he "wouldn't buy gold with my worst enemy's money. I think it should go below $1,000 in 2014.
Meanwhile, European investment bankers tend to respect gold more as an alternative to paper money. Germany's Commerzbank sees gold reaching $1,400 by the end of 2014. They predict bonds and stocks will not be as attractive in 2014 as in 2013, so "speculative financial investors" will favor gold once again. After gold bottoms out in early 2014, they say that the "gold ETFs [exchange-traded funds] should report inflows again from the second quarter, supporting the price recovery."
UBS is more bearish. They reduced their 2014 target to $1,200 per ounce, down from a previous forecast of $1,325. UBS also cut its 2014 forecast for silver to $20.50 per ounce, down from $25. UBS also said we could see a gold low around $1,050.
The basic fundamentals for gold's long-term rise are still in place. We can't know for certain that gold will resume its long-term rise in 2014 or later, but we tend to agree with the analysts at Commerzbank — that a modest rise in gold this year could bring back Wall Street's momentum investors, particularly if stocks begin to falter.
In "normal" times, we would predict a return to $1,300 gold for an average 2014 price, but unforeseen global turmoil, a continuation of monetary easing and a decline of the dollar could easily push gold higher — let's say to $1,420 in 2014.
About the Author: Mike Fuljenz
Mike Fuljenz is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.
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