Goldman Sachs sends following letter to their clients, after the FED surprised everyone yesterday by announcing another 1 trln USD bail-out exercise
I do not subscribe to the view that the gold market is overtly long as some have suggested. Indeed I think overall positioning is low. The ETF after a flat period has added 1m oz this week to 49m oz. This is mostly held by private wealth and real money accounts and is likely to be a small % of their allocations and at less than $50bn is not a large sum relative to holdings in cash currencies and fixed income. ETF investors are less easily persuaded to sell than their Comex counterparts as the below chart shows.
Meanwhile the real money and sovereign wealth community I believe is seriously considering a weighting from an almost zero starting point. Comex length which tends to be more short term has been reduced by 3m oz which is a good thing as it takes some of the fast money out. It appears that much of this has been taken in by a few macro funds with a more committed view. The announcement by a major fund of an investment in Anglogold could also be pivotal to sentiment in persuading newer players to make an allocation to gold.
Recently I felt there was a risk that gold could slip into the 870 support and to allow room to add to longs should it occur but I think yesterdays dip will prove to be the last decent buying opportunity for some time. The upside opportunity is far in excess of the downside in my view.
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I do not subscribe to the view that the gold market is overtly long as some have suggested. Indeed I think overall positioning is low. The ETF after a flat period has added 1m oz this week to 49m oz. This is mostly held by private wealth and real money accounts and is likely to be a small % of their allocations and at less than $50bn is not a large sum relative to holdings in cash currencies and fixed income. ETF investors are less easily persuaded to sell than their Comex counterparts as the below chart shows.
Meanwhile the real money and sovereign wealth community I believe is seriously considering a weighting from an almost zero starting point. Comex length which tends to be more short term has been reduced by 3m oz which is a good thing as it takes some of the fast money out. It appears that much of this has been taken in by a few macro funds with a more committed view. The announcement by a major fund of an investment in Anglogold could also be pivotal to sentiment in persuading newer players to make an allocation to gold.
Recently I felt there was a risk that gold could slip into the 870 support and to allow room to add to longs should it occur but I think yesterdays dip will prove to be the last decent buying opportunity for some time. The upside opportunity is far in excess of the downside in my view.
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