Gold Bulls Defy Price Slump as Paulson Loss Widens: Commodities – Bloomberg 07-09-13

Salient to Investors:

Money managers increased their net-long positions in gold and holdings of short contracts climbed to the second-highest on record.

Jeffrey Sherman at DoubleLine Capital said people want to own gold for a myriad of reasons, but the lack of inflation and a strong dollar are gold headwinds and are not going to change anytime soon.

Goldman Sachs and JPMorgan Chase expect the Fed to tapering its stimulus sooner than they had projected.  Goldman expects $1,050 gold by the end of 2014, and Credit Suisse expects $1,150 gold in a year.

Paulson & Co. reiterated its commitment to investing in bullion and stocks of gold producers to hedge against currency debasement, and expects outsized returns long-term.

Gold gains averaged 1.3 percent in half2s in the 1981 to 2000 bear market, versus average half1 losses of 3.9 percent.

Catherine Raw at BlackRock World Mining Trust said India’s demand for jewelry will pick up before the Diwali festival which begins in November.

Peter Jankovskis at Oakbrook Investments said India is a major user of gold for jewelry and other items but that demand will have a very muted effect on price as there will be plenty of sellers.

Michael Haigh at Societe Generale expects gold to average $1,150 in 2014, and says the bull market in commodities may extend for an additional 15 to 20 years, driven by urbanization and growing populations in China and India and elsewhere.

Rob Haworth at US Bank Wealth Mgmt said we have ample supply of agricultural products, but a little better demand puts upward pressure on prices. Haworth said the US is accelerating, and expects better global economic growth.

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