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JP Morgan: Gold Entering a New and Long Bull Market

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This article was submitted by Fabian Gambino, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

Are Wall Street banks finally getting on the right side of the gold trade?

In an interview with CNBC, Solita Marcelli, global head of fixed income at JP Morgan, revealed that the Wall Street investment bank is recommending that clients position themselves for a “new and very long” bull market in gold.

morgan

She explained that negative interest rates around the world are making gold a more attractive investment. Since gold is a non-yielding asset and has minimal storage costs, it actually compares quite favorably with the increasing number of negative yield bonds on the global stage. It has a positive carry.

Solita suggested that central banks might consider diversifying their reserves into gold with the fear that they might be getting negative rates on their existing holdings. Gold is a great portfolio hedge in an environment where world government bonds rates are at historical lows. It may, in fact, replace government bonds as the next risk off trade.

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Near term support for gold is in the $1,250 – $1,260 range, where profit taking has already tested once. Gold year to date remains up 20%. More risk off sentiment and more negative yields will drive more retail participation in gold adding more support and momentum. Solita believes there will be more legs to the gold market this year with a high probability of gold reaching $1,400 at some point.

This isn’t the first time this year that a major bank has gone long gold. Earlier this year, Paul Ciana, of Merrill Lynch Bank of America, stated that Bank of America went long gold at $1,089 looking for a potential rise as high as $1,550.

Perhaps Wall Street is finally getting on the right side of things when it comes to the yellow metal.

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6 thoughts on “JP Morgan: Gold Entering a New and Long Bull Market

  1. Jeff Brundige says:

    ALL I HEAR NOW IS GOLD GOLD GOLD……

    IT WAS SILVER, WHICH I WENT TO….SHOULD I SWITCH TO GOLD NOW ??

    • Theodore Lee says:

      Hardly. There will come a point, within 50 years, that there will be a one to one ratio of gold to silver. In the meantime, hold that silver man, as the gains of dollar to ounce silver, will outstrip dollar to ounce of gold.

    • Thomas S. says:

      No! Stick with silver . . . but you should have both. Look up Robert Kiyosaki’s YouTube on “Silver: The Greatest Sleeper of All.”

      Also look up Mike Maloney’s YouTube presentations. His take is to go 20% gold and 80% silver because silver will eventually outperform gold. Remember gold prices more or less set the silver price, so there’s a lag. The real kicker is silver, being an industrial metal, is more scarce than gold. It gets used up and in a lot of cases thrown away in the form of old computers and cell phones. I buy kilo bars of the stuff as well as 100 ounce bars with the intention of going long. According to the experts 1 ounce of silver could fetch as much as $500. You may have to wait a while for it to climb to that price but it will be worth it.

      Bix Weir has a lot to say about silver and David Morgan heads the top of the list as far as experts go on silver. D.M. has a blog called the Morgan Report that’s worth looking up. D. Morgan’s take is to invest 15% of your wealth into precious metals for a super performing portfolio. (My take is to take advantage of the super spike for both metals and go all in!)

      James Rickards just came out with a book “The New Case for Gold” (I have a signed copy) and he states plainly with logic and math that gold will go to $10,000 an ounce and probably much more. Silver will still outperform gold.

    • Thomas S. says:

      One last comment- click on “The Powerful Case for Silver” by Peter Schiff. It will answer your question. It’s a free download.

  2. Mitchell says:

    Gold and silver will rise together, silver should see a higher percentage rise. As long as you have physical metal, if you are in paper gold you will receive devalued Federal Reserve notes. Understand im just another person holding precious metals and land with no desire to hold more than a few months reserves of cash.

  3. Arch says:

    a lot of reasons for gold to go much high.
    The stocks will outperform the bullion in both
    silver and gold. Only thing better than buying now
    would be in the good stocks the past months.
    One analyst rated Silver Wheaton the best
    siver stock in the world!!

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