After a twelve year rally, the price of gold is accelerating toward a downward turn according to Goldman Sachs. They have reduced forecasts on the price of the metal in part due to the increased momentum of the U.S. economic recovery. We begin this week with a discussion of how the economic data both here and in Europe influence the price of gold. While some have worried that the relaxed monetary policies which have contributed to the economic recovery in the U.S. might lead to inflation, those at the International Monetary Fund would disagree. Our next article looks at the new research released by the IMF about the change in the nature of inflation. We then turn to the effect of slower economic growth on the stock market. With financial experts forecasting growth of two percent or less, Ed Easterling offers investors advice on how to adapt. We close this week with news from Bloomberg about a new phase in the efforts of regulators to curb the volatility of individual stocks.
Goldman Cuts Gold Price Forecast Through 2014 As Cycle Turns– The turn in the gold price cycle is accelerating after a 12-year rally as the recovery in the U.S. economy gains momentum, according to Goldman Sachs Group Inc., which reduced forecasts for the metal through 2014. The bank cut its three-month target to $1,530 an ounce from $1,615 and lowered the six- and 12-month predictions to $1,490 and $1,390 from $1,600 and $1,550. http://www.bloomberg.com/news/2013-04-10/goldman-lowers-gold-price-forecast-through-2014-as-cycle-turns.html
Central Banks’ Stimulus Unlikely To Boost Inflation, IMF Says– There’s little chance that the relaxed monetary policies which major central banks adopted to boost growth will lead to strong inflationary pressures, according to the International Monetary Fund. New research from the IMF concludes that the nature of inflation has changed in recent decades and is less likely to rise and fall in response to what’s going on in the economy than before. http://www.washingtonpost.com/business/economy/imf-monetary-easing-policies-show-little-risk-of-sparking-high-inflation/2013/04/09/099cd900-a132-11e2-9c03-6952ff305f35_story.html
Game Changer: Market Beware Slower Economic Growth– The US economy has grown about 3% per year on average for the last century. Now many financial experts such as Bill Gross (PIMCO) and Jeremy Grantham (GMO) are forcasting growth of 2% or less. In this article, Ed Easterling of Cresmont Research explains what this may mean for stock investors.http://www.crestmontresearch.com/docs/Article-Game-Changer.pdf
Regulators Institute Programs To Reduce Market Volatility – Regulators are implementing price bands within which shares on U.S. equity exchanges are allowed to trade. They are also testing fresh restraints that will suspend stock, options and index futures should the Standard & Poor’s 500 index dive. Both programs are set to run for one year.
http://www.bloomberg.com/news/2013-04-08/price-band-limits-to-curb-u-s-stock-volatility-starting-today.html
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John R. Day, Bill Ennis and Stephanie Davidson