Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Gold Wins Strongest Returns In 2014 So Far: Goldman Sachs

Published 02/17/2014, 01:02 PM
Updated 02/17/2014, 01:35 PM
Gold Wins Strongest Returns In 2014 So Far: Goldman Sachs

Gold Wins Strongest Returns In 2014 So Far: Goldman Sachs

By Nat Rudarakanchana - After a dismal 2013, gold has actually offered the best returns for the year to date among all asset classes in 2014, according to a Goldman Sachs Group Inc. (NYSE:GS) chart from Monday.

© Goldman Sachs Research. Total Returns 2014 YTD By Popular Assets & Sectors, Goldman Sachs Research Feb 14 2014

That comes on the heels of a 28 percent decline in gold prices in 2013, its worst year since 1981. Stock markets have been sluggish in early 2014, however, pulling out the brakes after a bullish 2013 gave rise to talk of potential market corrections in 2014.

Still, like many Wall Street analysts, the New York-based investment bank’s metals analysts maintain a dim view of gold prices for the upcoming year. Goldman Sachs’ Jeffrey Currie sees gold averaging $1050 over 2014, down significantly from its current $1318 per ounce.

In the research note sent out Sunday, Goldman Sachs also discussed global equities. It held global macroeconomic conferences in Tokyo and Hong Kong last week, and said the majority of the 2000 attendees were most bullish on equities, relative to other assets, and specifically European equities.

In contrast with Asian investors and portfolio managers, Goldman Sachs predicts that the Japanese stock market will post the strongest returns in 2014.

“It became apparent that Europe is viewed as the ‘default option of choice.’ Past experience has led us to expect a bias in favor of local [Asian] equity markets, but the pattern did not occur this year,” wrote the Goldman Sachs analysts.

There is much apprehension over a Chinese economic slowdown and Japan’s “third arrow” of Abenomics reforms, which has dampened local sentiment, said the analysts.

“Most clients subscribed to our view that the current high valuation of the S&P 500 will result in only modest returns for the index in 2014. By process of elimination, clients believe European equities have the best near-term return possibilities.”

Asia-based equity investors also have a dimmer view of potential gains in the S&P 500 for 2014, relative to their American counterparts, according to the note.

“American home-bias exists. Many US-based investors with whom we have met recently expect the S&P 500 will climb to 2000 - 2200 by the end of this year (+10% to +20%). No investor we met at the macro conference expressed such a positive view of the US stock market,” read the note.

Goldman Sachs forecasted that Japan would post the best total return in 2014, at 23 percent, followed by Asian markets excluding Japan (16 percent), and Europe (12 percent), with U.S. equities in last place at a projected 6 percent return.

Latest comments

The gold price rally, which has been driven by short covering and Chinese demand, will be short-lived, according to Barclays Capital and Goldman Sachs.. . Two words, 'bloody idiots'.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.