Must Read: "Gold: The Fed vs Brics Central Banks"
Goldman kicks off commodity Buy-Season by giving Gold the Oil treatment
Housekeeping: For the last two months there was no good precious metals research. Today ended that drought. Only one “good” report came out. But it is telling with implications for 3 months at least. We will do a proper write up on it for our Weekly post. For now we wanted to get something into subscriber hands.
(Energy Technical Podcast later this morning)
Gold Gets The Oil Treatment
Goldman put out one of their pre buy-season reports that we usually see for Oil as EOY approaches. But this one is on Gold. This means several things to us, most of them extremely constructive. The thing that matters most is:
Gold has a much better chance of appreciation alongside Oil going into the new year beyond than previously thought given the current monetary and macro backdrop.
More on why and how in our next Gold post Sunday.
Excerpt
In our view, this boost to CB demand primarily reflects demand for a politically neutral store of value. In our previous note, [EDIT- GoldFix covered that here - GF] we argued that elevated geopolitical tensions and the freezing of Russia’s foreign FX reserves should lead to a substantial increase in gold buying by central banks. In particular, we argued that Russia could buy up domestically produced gold due to a lack of investment opportunities while other countries could decide to increase their allocation to gold for precautionary reasons.
Much more on that soon including what to look for if it’s all just noise. Here are points of interest to us also to be covered Sunday
EM CB buying hits a record
The interplay of Fed and EM CB demand creates gold’s return asymmetry
EM CB spike came from unreported component
The increase in CB purchases reflects demand for a politically neutral reserve asset
What is gold price sensitivity to changes in CB demand?
It is important to note. We are not recommending you go out and buy gold from this report. In fact, Goldman is not even recommending you buy Gold. But this is how the table is set. And IF it gets traction, this will be the first of multiple reports from multiple banks. And it will be because the groundswell is too big to ignore anymore.
FULL REPORT AND MORE NOTES AT BOTTOM
