Gold 10x Upside: A Trade Idea From Goldman

Gold last traded at $1,852 an ounce. Silver at $24.85 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday as upbeat economic data boosted the dollar. U.S. stocks rose after a strong October retail sales report in the face of rising prices.

ZeroHedge--"Is gold about to have a new chance to shine? According to a recent burst of pro-gold articles, golden sentiment may be about to shift.

As Bloomebrg writes today, 'gold may outperform the S&P 500 Index about 20% as the threat of stagflation becomes real.' It elaborates:

'Concerns over peak economic growth are coinciding with rising inflation, which pushed the real yield on Treasuries to record lows. The high correlation between the real yield and gold suggests bullion is undervalued. Trading signals based on 20-week moving averages imply a potential breakout rally over the next year.'

One of the factors cited by Bloomberg is that gold has a strong inverse relationship with the U.S. real interest rate, which has resumed its slide into negative territory since March....A so-called volatility squeeze...suggests a significant increase in volatility ahead, potentially in favor of gold. And, as Bloomberg further notes, a trading strategy that follows the weekly crossover with a volatility squeeze has helped gold to beat S&P 500.

Bloomberg concludes, 'if this pattern repeats, gold is well primed to outshine S&P 500 next year.'....A far more convincing pitch for gold also on Friday came from none other than Goldman's head of energy research Damien Courvalin who repeated the bank's recent optimistic talking points on the yellow metal in an interview with Bloomberg in which he said that 'gold is set to boom' far higher from its current price."