Buy gold and sell oil, Goldman’s strategy in the middle of the Middle East crisis
Buy gold and sell oil, Goldman's strategy in the middle of the Middle East crisis
The gold is the best shield against geopolitical uncertainties. At least, according to Goldman Sachs. The American investment colossus has revealed its winning hand in the middle of the Middle East crisis between Iran and the US: buy the precious metal and sell oil.
Getting long in gold gives the investor “a greater advantage” than shale from geopolitical risks, they say from the US entity.
The two raw materials are giving reasons to believe in them. On the one hand, gold is at highs in April 2013. On the other, crude is trading at highs of 2018. Both are moving to the sound of this uncertainty in the Middle East. The difference is that Goldman sees more bullish travel to the precious metal.
“The escalation of geopolitical tension always drives gold prices, especially during periods of wars or military interventions,” Goldman recalls. The US investment bank reiterates to gold a target price of $ 1,600 (from its current levels of $ 1,578 per ounce). Of course, he warns his forecasts of risks “if these tensions increase even more.”
The oil rally is due, in turn, to the Middle East being a region through which 21% of the oil consumed worldwide is circulated each year. If it ceases to be safe, black gold prices become more expensive and supply narrows.
Despite this, Goldman believes that oil “is biased more downward” and except for a “brutal disruption” of its supply that puts the supply of demand in real danger, it should not rise much more. So much so that the entity maintains a target price of $ 63 per barrel of Brent, which is currently at 68.
This disruption is far from happening considering that the US is “less sensitive than ever to it.” Why? Because in 2016 it already manufactured between 86% and 91% of the energy it consumed, that is, it is a country that is widely self-sufficient and increasingly immune to risks outside its borders.
Goldman is not alone in this. Mohamed El-Erian , economic advisor of Allianz Global Investor, with 623,000 million dollars of assets under his management, has told Fox News that “the US is less vulnerable to the oil shock now than before thanks to the fact that it has become one of the world’s great producers.”