Wells Fargo hedges the price of gold
$1952 an ounce for gold "is a bubble," and is "not... a bubble," Wells experts say. Whatever happens, the bank can claim, "I told you so"
Yes, says Wells Fargo & Co.
With gold prices closing in on their (inflation-adjusted) 1980 record high of $1952 an ounce, "we still do not believe gold is a bubble about to burst, because the underlying conditions that have pushed gold to these levels are not expected to be resolved for some time," writes Scott Anderson, senior economist at Wells Fargo & Co., the biggest bank in Philadelphia and many other US metro markets, in a report to businesses and other today.
That's the opposite of what Dean Junkans, chief investment officer for wealthy individual clients at Wells Fargo's private banking division, told clients last week: "Gold investing has reached the level of a speculative bubble," which resembles "past speculative bubbles, e.g. (the) housing bubble, Internet bubble, (Japan stock) bubble... The current price of gold is a bubble that is poised to bust.
No way, writes Anderson: "Gold still hasn't risen as much or as fast as Nasdaq" in the dot.com bubble or oil in the mid-2000s. The price has risen quickly enough that "it is possible we could see a near-term pullback," but it won't likely be very large, and it will "probably not last very long before gold prices start to rise again," given such "fundamentals" as "dollar weakness," the Euro debt crisis and "uncertainty" about Washington's deficit plans. In sum: "We do not forsee an outright crash in gold prices."
Junkans does forsee a crash, even if prices keep going up for a time. He's confident this can't last; he notes that he and his organization have been watching gold prices for a very long time, and "we will be proven right in the long run."
Well, which is it?
