Business Insider: Gold Will Outperform Crypto As An Inflation Hedge and Has 38% Upside, Goldman Sachs Says
Article by Matthew Fox in Business Insider
At about $1,800 per ounce, the current price of gold is pricing in a "goldilocks scenario" of moderate inflation and a continued global economic recovery from the COVID-19 pandemic, Goldman Sachs said in a Tuesday note.
But if inflation sees a higher than expected surge, or if the global economic recovery falters, there is significant upside to the price of gold, according to Goldman.
"In a scenario where the global economic recovery does not play out as expected or inflation begins to move materially above expectations, we see material upside to gold given its undervaluation and low allocation from the investment community," Goldman said.
The bank sees gold hitting as high as $2,500, representing 38% upside potential from current levels. Given the significant upside, Goldman views gold as a "good strategic purchase" for investment managers that want to hedge against tail risks.
"In our view, this implies gold can outperform cryptocurrencies, which we view as more risk-on inflation hedges. Overall we see crypto still far from becoming a defensive long-term store of value like gold," Goldman said.
"Ultimately, a number of uncertainties are still hanging over the global economy. Therefore, gold may be a good strategic purchase for portfolio managers looking to ......
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