Goldman Says Current Gold Coin Prices Don’t Reflect Value

Goldman Sachs joined a list of banks that have placed very high projections on the gold price several months ago, but they have today released a report indicating that that current gold coin prices do not reflect current market valuation levels.

Goldman Sachs, Credit Suisse, and JP Morgan have all released reports prior in the year that place the gold price much higher in the coming months. Typically, the banks cite persistently low interest rates, negative real interest rates, and a sluggish economic recovery as major market fundamentals that keep the gold price headed higher.

In the past months, the projections for gold going higher actually increased and moved up in their time frame. We know that gold will be worth more in the coming months and even years, we simply don’t know exactly how much when.

Citigroup and JP Morgan have been relatively liberal with their market projections for the gold price with both banks putting the price per ounce over $2,000. Considering the performance of gold in the past two years, this is a safe estimate.

The significance of today’s report from Goldman Sachs is that the bank has said that current gold coin prices are not reflective of gold’s actual value in the market place. Most investors were generally aware of this on some level, even those without strong knowledge or positions in the gold market. But now one of the biggest and certainly the most influential bank is openly stating that the gold price is rightfully much higher than is currently thought.

Goldman Sachs cites the current level of real interest rates indicate a much higher gold price than we are currently seeing on the market. Real interest rates have been at record lows for some time and the Federal Reserve has already announced that it will keep rates low through the end of 2014. This is the best news the gold market could have asked for as it essentially ensured a growth environment for the next 36 months.

Now that Americans are waking up regarding the real value of the price of gold on the market, we will see more and more a change of valuation of precious metals relative to other investments on the market. Current gold coin prices are unsustainable at the current low levels and will necessarily move higher as real interest rates force the economy forward, making gold one of the best investments to make now.

Kevin Johnson

Senior Staff Writer –

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