As pointed here several times over the past few months. Banks are now readjusting their *public-facing* models to account for CB and BRICS buying. This gives them latitude to recommend gold more wholeheartedly to American investors.
CITI, BOA, and MUFG are the ones we saw and commented on.. With the attached, Goldman joins the ranks officially, and convincingly.
From Goldman below:
However, the perceived disconnect between gold prices and interest rates is actually due to increased gold purchases by EM central banks concerned about US financial sanctions and rising US debt.
This surge in central bank demand has elevated gold prices and reset the relationship between gold prices and absolute interest rate levels. Importantly, Exhibit 2 shows that the relationship between changes in interest rates and changes in gold prices remains intact.
Gold hasn’t decoupled from yields and the dollar, but the beta has decreased. While a gap has opened up, this does not mean the relationship has broken down.
To Clarify: They all but state that Gold’s beta to the USD and rates is now resetting due to increased CB/BRICS interest.
When "they" get enough Gold, these correlations will probably reassert themselves again. But until then, betting on complete convergence is a dangerous game.
