Salient to Investors:
Barclays and Credit Suisse are predicting lower commodity prices as supplies increase.
Dan Heckman at US Bank Wealth Mgmt said the US economy is showing ample signs of growing, and so the Fed will start looking at tapering by early next year. Heckman is underweight on commodities as the stimulus support will end at a time when supplies are rising and worries about Europe are increasing.”
Goldman Sachs said last month that gold will hold near $1,300 until year-end and then decline to $1,050 at the end of 2014 as an improving US economy prompts less stimulus.
John Paulson said the risk of high inflation remains in the future, triggered by the Fed’s asset purchases.
Jeff Sica at Sica Wealth Mgmt said expectations of long-term inflation, plus risks to growth during Q4 caused by the government shutdown in October may push gold higher, plus long-term buyers will be buying gold as global easy money policy pushes inflation higher.
Suki Cooper et al at Barclay’s said the environment for commodities has deteriorated again after Q3 improvement as supply disruptions dissipate, Chinese economic data softens, and near-month premiums ease in markets including oil – this subdued tone will persist into year-end.
Credit Suisse said the rebound in global industrial production since Q4 2011 is peaking and gold demand from China has peaked for the year.
The Gems & Jewellery Trade Federation said gold purchases in India will fall in this year’s festival season, and sales of coins and bars may decline to as little as 25 percent of the year-earlier total.
Paul Christopher at Wells Fargo Advisors said commodities will struggle to find a balance with supplies rising as demand remains stable and, in some cases, is falling, so recommends investors reduce their long-term allocation to commodities.
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