Paulson Outlook
Gold’s price drop hasn’t changed billionaire Paulson’s intermediate to long-term outlook on the precious metal, said John Reade, partner and global strategist at Paulson & Co. in New York in a statement on April 15. Bond buying by governments will increase demand for gold even as the commodity is “going through one of its periodic adjustments.”
Currie’s correct gold recommendation came as he celebrated his 17th year at Goldman Sachs on April 15. He joined the bank after earning his doctorate from the University of Chicago in 1996, and became a managing director in 2002 and partner in 2008. He moved to the New York office last year from London, where he worked since 2003 and served as European co-head of economics, commodities and strategy research from 2010 to 2012.
Best Call
Investors who followed Currie’s recommendation on gold would have earned returns of about 12 percent -- not the best call he’s ever made. In 2007, he made a bullish recommendation on oil that yielded 23 percent. The price of crude touched a 19- month low in January 2007 in New York before surging to a record $147.27 a barrel in July the next year. Another bullish recommendation on a basket of commodities in 2011 yielded 23 percent, while a bet on higher oil in 2012 lost 36 percent.
In 2007, “it was much more of a contrarian call,” than the recent one, Currie said. “We were fighting the tape in the sense that you had a substantial pullback in commodity prices into the first quarter of 2007. This time, if you look at a chart, gold was trending downward consistently, so this was less of a contrarian call than ones we’ve made in the past.”
While futures averaged a record $1,671 last year, prices were already in a five-month slump through February that was the worst since 1997 and a month before Goldman Sachs advised selling the metal. Gold is now 28 percent below its September 2011 record.
Non-Winners
Not all of Currie’s recommended trades are winners. The bet on higher copper prices that was recommended on March 1 has lost about $498 a metric ton, according to an April 16 report from the bank. Copper is about $7,080 a ton. Goldman Sachs said then that it was closing its crude, corn and industrial metals basket for a loss.
Other banks have also turned more bearish on gold this year. Societe Generale SA said on April 2 that the metal was in bubble territory and would fall to $1,375 this year, when it was $200 higher. On April 16, it advised investors to add to holdings at about $1,300 an ounce. Barclays Plc, Credit Suisse Group AG, Danske Bank A/S and BNP Paribas SA are also predicting lower average prices in 2014 than this year.