The bearish case for spot gold prices here, according to Morgan Stanley, involves a worsening demand picture from China coinciding with a rise in rates here in the US. MS sees more than 20% potential downside from here ($1100 per ounce) should this scenario play out…
Scenarios: Likely vs. Worst-case
1. likely case scenario for gold = US$1,050/oz …drifts lower on Greece’s latest debt resolution + robust/stable USD + weak oil price, but holds above significant $1,000/oz => implies US$14/oz silver (i.e.current Au:Ag ratio holds).
2. worst case scenario for gold = US$800/oz …requires another China equity market correction + commencement of rate hike cycle in US + central bank sell-down of reserves => implies $10-12/oz for silver (i.e. both prices + ratio, broadly correspond with 2008Q4/GFC lows).
To understand why higher real rates are such a threat to gold, have a look at the below chart:

Source:
Precious Metals – Last Bastion, Besieged
Morgan Stanley – July 22nd 2015
Gold vs Interest Rates http://t.co/Pr7UnOaqGT #Uncategorized @ReformedBroker
Gold vs Interest Rates http://t.co/nxhlIW0dey The bearish case for spot gold prices here, according to Morgan Stanley, involve a worsenin…
Gold vs Interest Rates http://t.co/7lyUQeXw3X
Gold vs Interest Rates http://t.co/Bu8gnszXWm
#gold bugs beware. It’s about to get real RT @ReformedBroker: Gold vs Interest Rates http://t.co/ugwNrV7ipm
RT @ReformedBroker: Gold vs Interest Rates http://t.co/Bu8gnszXWm
RT @ReformedBroker: Gold vs Interest Rates http://t.co/Bu8gnszXWm
[…] Why real interest rates are a threat to gold. (thereformedbroker) […]
If Interest rates and Gold are on your mind, this post from Josh Brown is a good read.. http://t.co/KDmzNLflUg
Gold vs Interest Rates: When a picture really is worth $£thousands… @ReformedBroker http://t.co/KQ40K6LFeS
Charting Gold versus Interest Rates… @ReformedBroker http://t.co/Z2Fsk551Vk
RT @asibiza1: Charting Gold versus Interest Rates… @ReformedBroker http://t.co/Z2Fsk551Vk
Morgan Stanley lays out bearish case for Gold http://t.co/0dwgRC9EKQ
[…] wary of any payday loan company that is not completely up front with their interest rates and fees, as well as the timetable for repayment. Any company not willing to share this information […]
… [Trackback]
[…] Here you can find 28605 more Info to that Topic: thereformedbroker.com/2015/07/23/gold-vs-interest-rates/ […]