Goldman Sachs Wants You To Buy Gold Now

 Here are three reasons why Goldman Sachs thinks you should buy gold now: 

1. We cannot expect high returns from U.S. equity market. Investors should allocate more money to defensive investment such as gold.

2. Emerging markets GDP growth will accelerate. That will create more demand for gold.

3. Goldman Sachs believes gold supply will peak sometime this year.

 Although not as enthusiastic as Goldman Sachs, Citibank's analyst revealed a cautiously optimistic view on gold this morning. 

we have confirmed triple weekly momentum divergence on Gold and as a reminder, this is one of our favorite indicators to suggest that a trend (downtrend in this case) is running out of steam.

 Citi did not tell you to buy gold outright, but I am sure many investors took the statement as gold is currently forming the bottom. 

 Below is the daily chart of gold. 

 What interesting to me is how smart money is behaving. Take a look at the commercial hedgers (green line). The line is consistently below zero . That means commercials are short sellers of gold. But, if you look at closely, the green line is currently rising. That tells us smart money is covering some of their short positions now. As you can see, every time commercials began to cover short positions, rising gold prices followed. I guess many investors are hoping the same thing will happen this time too. 

 Gold seasonality is also interesting. The chart below shows past 20 years of gold seasonality.  

 In general, first half of the year is directionless, but the second half is clear uptrend. It may not be a bad idea to buy some gold for anticipation of strong price  performance in fall and winter. 

 Of course, we should not forget to keep a contrarian view in our heads. Here's a warning from Zero Hedge: 

While Goldman's arguments are sound, the fact that the bank is urging its clients to buy gold, ideally from Goldman, suggests that the selloff is most likely nowhere near done.

(sources: Will Gold's Tumble Continue? Here Is Citi's Answer

The 3 Reasons Why Goldman Just Turned Bullish On Gold)