News Header


Morgan Stanley, UBS, Barclays See Support for Gold

Release Date: 
Monday, March 5, 2012

Gold moved lower on Monday, reflecting concerns over progress in Greek debt restructuring and euro zone economic data that drove the euro lower against the dollar. Gold was also lower on China’s projected growth target which is the lowest in eight years. China also targeted inflation at 4%. Gold was trading at $1707.70 per ounce at 6:09 a.m. Pacific Time on the New York Spot Market with silver at $34.76 per ounce.

Analysts at Morgan Stanley, UBS and Barclays Capital say gold will be supported in the long-term by several factors including loose monetary policy, negative real interest rates and inflation concerns. "Negative real interest rates and accommodative monetary policy were and remain the key drivers of investment demand," Morgan Stanley said in a note. "Bernanke's testimony did nothing to remove this benefit," the bank said, discussing remarks by the Fed chairman that fell short of hinting at further quantitative easing. "Under these circumstances, QE3 would have been icing on the cake for the monetary easing trade, but not the fundamental driver of bullish investor positioning," Morgan Stanley said.

"We heard more mention of rising inflation expectations than we have for some time," said UBS. The bank noted, "in our meetings last week, factors like the explosion in the balance sheets of the ECB, BoJ, BoE and the Fed and large exports of gold from Hong Kong into China in Q4 were regularly cited as reasons to view gold favorably this year." Still, the bank saw no progress on a reversal in monetary policy. "The macro community appears to be engaged in a waiting game, with no one willing to take the first step," UBS said.

Yesterday, Suki Cooper of Barclays Capital said, "the broader macro backdrop remains gold favorable, given the negative interest-rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties."

(Sources: "PRECIOUS-Gold slips as euro zone worries lift dollar," Reuters, March 5, 2012; "Gold May Drop as Stronger Dollar Erodes Demand, China Lowers Growth Target," Bloomberg, March 5, 2012)

News Footer


†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.