Goldman Sachs Says Gold Will Top At $1,750 In 2012 (GS)

Not too long ago I wrote an article outlining why I believe it is lunacy for anyone to attempt to call a top in gold. The basic premise was that gold has very little practical utility, its "value" is very subjective, and its price is determined almost exclusively by human psychology. The conclusion was that given the peculiarities of gold as an asset class, only a fool would attempt to call a top. This is particularly true given the current 10-year bull market in the yellow metal. Well Goldman Sachs GS is not only attempting to call a top, it is predicting when it will occur. According to the bank, gold will peak at around $1,750 in 2012. Below is an excerpt from a GS report. Make what you will of it, but my advice would be to ride the trend and ignore the prognosticators. "Gold prices will likely continue to trend higher in 2011, supported by a fresh round of quantitative easing in the U.S., before recording a peak around $1,750 a troy ounce in 2012, Goldman Sachs said in a report Wednesday. The investment bank said it expects downside risks for the precious metal, which has rallied 25% since the start of the year, to increase as economic growth and real interest rates recover. “At current price levels gold remains a compelling trade, but not a long-term investment,” it said. “With the current round of [quantitative easing] set to end in June 2011, and our U.S. economics team now forecasting strong economic growth in 2011 and 2012, we expect U.S. real interest rates to begin to rise in 2011, likely causing gold prices to peak near $1,750/oz in 2012.”