Goldman Review
There is a long held belief that Wall Street in general and the big banks specifically, perhaps most specifically Goldman Sachs, believe that gold is not investment worthy. That, however, is FALSE. The average broker will not make a commission by recommending an investment in gold versus a trade in a stock; however, does the research firm feel the same?
According to a recent paper, the answer is no, Goldman Sachs does not believe what the average salesman on Fraud Street believes. And that is nice to hear, indeed.
A few prominent managers on Wall Street and in the halls of global market manipulation, the Federal Reserve, have trashed gold investments over time; one of them being prior Fed-head Ben Bernanke. On multiple occasions Mr. Bernanke and others have been quoted as saying that they do not prefer gold because it does not offer a yield.
What these fools do not seem to understand is that it is a long term investment; it is a store of wealth against the very people complaining about gold – the very ones trying to destroy your purchasing power.
It was a relief to read some sanity from a Wall Street firm, Goldman Sachs, where an analyst or two were allowed to say nice things about a great investment that has been valid for thousands of years.
In the report we read: “precious metals remain a relevant asset class in modern portfolios, despite their lack of yield” and disagrees with Ben Bernanke and the naysayers “They are neither a historic accident or a relic. Indeed, by looking at each of the physical properties of an ideal long-term store of value…we can clearly see why precious metals were initially adopted and why they remain relevant today.”
It went on to write: “We see two key drivers of the precious metals markets: Fear and Wealth. In our new framework we see a closer link to growth expectations. However, we see that many risk factors are relevant, depending on the sub-component of gold demand: real interest rates, debasement risks, sovereign balance sheet risks, geopolitical risks and other market tail-risks. Stated more simply, we are talking about the drivers of ‘risk-on’/’risk-off’ behavior in markets. We see large and persistent deviations from the long-run equilibrium allocation to gold, driven by ‘risk-on’/’risk-off’ episodes. While the forces driving risk sentiment can shift over time, they are nearly always highly cyclical in nature. Growth expectations and the business cycle are therefore key variables, being negatively correlated to gold demand.”
So even Goldman Sachs, the quintessential paragon of Wall Street, admits that it is wise to invest in GOLD for the long term. There may be many different reasons to be sure, like tail risk, but the investment is solid — and the investment is GOLD.