"We saw the economic damage of past bubbles and we feel obliged to ring the bell", said analysts at Wells Fargo in a report released yesterday.
The price of gold hit a record this year, gold was up 24 percent since January 2011 after 10 years of successive gains. The price of gold rose above $ 1871.6 an ounce on Aug. 11 after a massive demand from investors fleeing the risks of European sovereign debt.
"There could be a significant risk on the price of gold after fears about sovereign debt will be eased", said Dean Junkans, co-author of the report in a telephone interview."We are concerned with a significant downside risk" he warned.
The gold holdings through exchange-traded products have reached 2217 tons according to data from Bloomberg on August 8. The CME (Chicago Mercantile Exchange) said that the gold futures and options contracts traded on the Comex hit a record high on August 9 with 504,368 opened contracts exceeding the previous record dated July 28, 2010 with 469,689 contracts.
George Soros, who had previously warned against a bubble in the precious metal has reduced its stake in SPDR Gold, an exchange traded fund, in the second quarter as prices had soared while the billionaire John Paulson has maintained a consistent stake in the fund, according to a statement with the SEC revealed this week. Steven Cohen, founder of SAC Capital Advisors has opened a new position in the SPDR Gold exchange traded fund. The investment in the yellow metal, made in June, is valued at $ 628 million. According to the Wall Street Journal, this transaction represents the largest investment disclosed by SAC Capital Advisors.
Central Banks from Thailand, South Korea and Kazakhstan have increased their gold reserves amounting $ 2.56 Billion in July, joining Mexico and Russia which had already started this strategy to cover their foreign exchange reserves.
About 60 percent of clients surveyed by UBS expect gold prices to trade above $ 1,800 by the end of the year. The survey was conducted in the first two weeks of August, the bank said
