Morgan Stanley, a longtime establishment investment house, recently released a report on gold that stated: “We rarely use gold in our asset allocation, but occasionally there are opportunities and currently we see one of them.” Morgan Stanley & Co.’s global commodity strategist has a $1,300 per ounce price target on gold by year end.
$1,300 by year end would be a strong move and would result in gold gaining a lot of attention in the investment community.
The report noted two potential developments that could fillip the price of gold, “a recession induced by a Federal Reserve policy error” and the $200 billion worth of tariffs that Trump is threatening to lay on Chinese imports.
Interestingly, the report noted that “US (stock) markets continue to shrug off global stresses like economic slowing, rising trade tensions, a strengthening dollar, EM currency volatility and an inflation threat.”
Morgan Stanley proffered the usual establishment caveats that gold pays no interest or dividends; further MS does not see gold as a long-term holding. That position could change as other developments surface.
Interestingly, MS noted that “investors do not seem prepared for anything but a continuation of the current upward trend, something that is hard to fathom if US tariffs on $200 billion in Chinese goods go into effect.”