Goldman Goes Gaga Over Cyclical Commodities, Says Gold Run Is Ending As QE2 Comes To A Close (Full Commodity Update)

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Mon, 01/24/2011 - 18:26 | 900321 Pladizow
Pladizow's picture

So Goldman's buying gold from its clients!

Mon, 01/24/2011 - 19:01 | 900469 66Sexy
66Sexy's picture

i guess they cant just say "buy all key commodities due to inflation/QE pressures" so they have to dance around and hem and haw the bullshit.


Mon, 01/24/2011 - 19:30 | 900591 Mark McGoldrick
Mark McGoldrick's picture


I am particularly interested in Goldman's view of silver. Their quote:


Over the long run, silver prices tend to track gold prices. Thus, our silver forecast reflects the historical ratio to gold...


On November 28, Eric Sprott said the historical gold/silver ratio is 16:1, which is the exact same ratio proffered by the xtranormal bears on December 2.  Of course, one has to use a 5,000 year chart to extract that ratio, but I'm wondering if Goldman Sachs thinks this 16:1 ratio of gold/silver for the 3,000 years before Jesus Christ is relevant?  If it is relevant, silver should shoot to the moon and Sprott's newly issued PSLV would be a fantastic place to invest.


If you look at a 15 year chart (a little more relevant to our times), gold trades around 60:1 to silver.  That means silver should be in the lower 20's.


Which ratio makes more sense?  The one reaching to 3000BC (the position of Sprott and the cartoon), or a modern 15 year chart that reflects current economies?   Maybe Goldman is using the 15 year chart, plus adding some juice to reflect all the JP Morgue hysteria. 


Mon, 01/24/2011 - 19:45 | 900666 goldmiddelfinger
goldmiddelfinger's picture

If there isn't enough tension in the G/S ratio to take it below 40/1 now, it would seem unlikely to take it much lower in the near future. Plenty of silver in the ground sees daylight over $20 especially in the emerging market economies which have ample resources, e.g. Mexico, Argentina, Chile.

Mon, 01/24/2011 - 22:38 | 901313 Stormdancer
Stormdancer's picture

Yassuh boss thas right!  Ya jes flips a switch on the back side of some third world desert and BAM! 2000 tonnes of silver get added to global mine production!  Sheeeeeeeit...jes flips two switches if ya wants 4000 tonnes.  Easy peasy lemon squeezy!

Tue, 01/25/2011 - 00:56 | 901661 Mark McGoldrick
Mark McGoldrick's picture

My point - which may have been missed in sarcasm - is that the 16:1 ratio is fucking ludicrous.  Do you actually think the gold/silver ratio from 3000 years before Jesus Christ has any relevance to Comex traders tomorrow? For Sprott (and the extranormal bears) to reference it is unbelievably disingenuous. 

The 15 year ratio doesn't matter much either, but it certainly is more relevant than gold/silver pricing dynamics from days when the first wheeled vehicles were rolling. 

Mon, 01/24/2011 - 19:52 | 900692 NOTW777
NOTW777's picture

extremely lazy analysis even for GS

Tue, 01/25/2011 - 00:12 | 901590 Farcical Aquati...
Farcical Aquatic Ceremony's picture

In their defense, history has shown that many who achieve absolute power end up bored, crazy and syphilitic.

Mon, 01/24/2011 - 20:01 | 900716 Turd Ferguson
Turd Ferguson's picture

Exactly, Plad.

If there was any doubt that we are now at the bottom of this current correction, this little nugget should remove it.

Mon, 01/24/2011 - 18:38 | 900352 etrader
etrader's picture

Thx for posting that.... :-)

Bows head in shame after posting, we don't get as many full notes these days on CD's beautifully written but  mammoth piece.... ;-)

Mon, 01/24/2011 - 18:35 | 900355 walküre
walküre's picture

Over the long run, silver prices tend to track gold prices. Thus, our silver forecast reflects the historical ratio to gold.


Gold $1690 and Silver $28.20 and they speak of historical ratio?


Goldman Sachs is not welcome in Iceland, Ireland, Greece, Tunisia, Algeria .. and counting.


The cabal is on its death bed. Put a fork in her, she's done!

Mon, 01/24/2011 - 18:35 | 900357 chet
chet's picture

There will be a QE3.

The deficit IS the economy.

QE IS the deficit.

There will be a QE3.

Mon, 01/24/2011 - 18:43 | 900391 walküre
walküre's picture

The debt problem isn't going away.

Monetizing more debt to pay the interest on existing debt...

Rubber meets road. Shit hits fan. Mountain of funny money vs. increased demand for finite commodities.

Imagine, there's an exchange and nobody participates because the sellers and buyers are trading elsewhere.

Call it black market, call it alternative exchange. It's coming.

Mon, 01/24/2011 - 19:02 | 900474 chet
chet's picture

I agree that it is unsustainable.  But I think they can do at least QE3 if not more before it all blows up.  It will last longer than a lot of people think. 

The easy road of extending and pretending will keep presenting itself.  If you are congressman, putting your neck out there to fight extension of the debt ceiling is hard.  Just being one of the hundreds to vote for it is easy.


Mon, 01/24/2011 - 19:53 | 900689's picture

If you are congressman, putting your neck out there to fight extension of the debt ceiling is hard.  Just being one of the hundreds to vote for it is easy.


It's never easy for a man with integrity to do the wrong thing. But you're talking about congressmen, so yeah, I agree with you.

Mon, 01/24/2011 - 18:50 | 900423 Double down
Double down's picture

S&P IS Inflation

Mon, 01/24/2011 - 18:40 | 900368 Quinvarius
Quinvarius's picture

Finally, GS says gold will underperform.  The last two months of their bullishness has been a hellish waiting perdiod for this rally to continue.  It is good to see they are bullish on copper.  I always thought that rally was bunk.

Mon, 01/24/2011 - 18:38 | 900371 Spitzer
Spitzer's picture

likely causing gold prices to peak in 2012.

What about that 30 year bond bull market ?

Mon, 01/24/2011 - 18:45 | 900397 awakened
awakened's picture

Can anyone tell me what price over spot I should expect silver coins like maples to run? Currently at APEX it is just over $3.30/oz. over spot for 25  1 oz. coins.  I've never bought the physical so I'm wondering what that spread has traditionally been.

Currently I am doing well with silver, palladium and molydium miners but I'm thinking I would like to own the physical as well. Wish I would have bought silver coin when I first bought the miners.

Mon, 01/24/2011 - 18:59 | 900458 DaBernank
DaBernank's picture

I usually pay ~$3 over spot per oz. of silver maple.

Mon, 01/24/2011 - 19:30 | 900605 awakened
awakened's picture

is APMEX the best place to buy physical in the US? And does it really matter whether it is a maple, APMEX or other coin? I am not a collector, I just want a bit of a hedge. Thanks for responding.

Mon, 01/24/2011 - 20:33 | 900831 JohnG
JohnG's picture

For a large quantity, AMPEX is probably the best.  I use gainesvillecoins (no affiliation) for smaller purchases.

As for coins, I like eagles, but as long as it is easily recognized as bullion it shouldn't matter.  Maples for gold, .9999 and all.

Hope it helps!

Tue, 01/25/2011 - 10:27 | 902338 JW n FL
JW n FL's picture



Subject: RE: Gainesville Coins



Dear Mr. Castellano,


As you know from the below email, our office has the honor and responsibility of representing XXX. XXXXXXXX We would appreciate confirmation as soon as refunded our client in full.  I am at a loss to understand why you required wire instructions when a credit will suffice.



In any regard, please refund the amount in full promptly and be sure to reply to me that same has been completed.



Thank you for your assistance.


Rusty Huseman


William R. Huseman, P.A.

3733 University Blvd. West, Suite 305A

Jacksonville, Florida 32217

(904) 448-5552

Fax (904) 448-5653

Mon, 01/24/2011 - 19:52 | 900690 ILikeBoats
ILikeBoats's picture

If you have the cash (500 oz. at a time of silver) is significantly cheaper.  Maples are $1.99 over spot and shipping is free.

Downsides: Tulving's site will make your eyes bleed and they only accept wires and checks, no credit cards.

Mon, 01/24/2011 - 18:48 | 900411 Thunder Dome
Thunder Dome's picture

Goodnight Gold.  Goodnight Silver.  Goodnight King, Sprott, and Sinclair.  Time for bed. Shhh.  

Mon, 01/24/2011 - 19:52 | 900691 goldmiddelfinger
goldmiddelfinger's picture

Dude, this is ZH. You speak heresy! I'm going to run a stopwatch to see how long it takes for you to get junked twice (that way you know it's not me hitting my own bid)

Mon, 01/24/2011 - 21:02 | 900940 Exposer of Inte...
Exposer of Internet Shills's picture

sniff sniff  I think I found one

Mon, 01/24/2011 - 18:49 | 900415 awakened
awakened's picture

Actually make that over $4.73 over spot price for just 1 roll of 25 coins.

Mon, 01/24/2011 - 18:50 | 900418 gold mining ceo...
gold mining ceos are idiots's picture

Goldman knows damn well that Martin Armstrong's model calls for a puase into June 2011 and an explosion into 2015, hence the comment on producer hedging.


But as my tag says...they are idiots!!!!!!!!!

Mon, 01/24/2011 - 18:53 | 900435 TruthInSunshine
TruthInSunshine's picture

The Goldman kiss of death?

"You broke my heart, Lloyd, Jan & The William Dudley (ex-Goldman Partner, now head of the New York Branch of the Federal Reserve, and in charge of gifting POMO commissions of 60 Billion per year to Primary Dealers - like Goldman!)."

Mon, 01/24/2011 - 19:24 | 900581 goldmiddelfinger
goldmiddelfinger's picture

Don't you have some peasant tenants that need caning?

Mon, 01/24/2011 - 18:57 | 900448 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

According to Denninger's site Obama will use the SOTU speech to announce that the debt and deficit problems will soon be solved.


Of course its a farcical lie.


But if Gold went down today in the face of a lot of otherwise bullish news (Russia attack, Ireland govt collapse), what will happen when the "news" indicates America's total recovery?

Mon, 01/24/2011 - 19:08 | 900489 TruthInSunshine
TruthInSunshine's picture


Mon, 01/24/2011 - 19:10 | 900511 Hephasteus
Hephasteus's picture

As spanish inquistion posted the other day.

We are arriving at the rapid fire pronouncement of battleship moments.

There will be shoe throwing. Count on it.

Mon, 01/24/2011 - 19:32 | 900614 goldmiddelfinger
goldmiddelfinger's picture

You're going to lose money holding physical gold and silver. You'll have to find another greek god of pagan bullshit to hide behind to crypsis your idenity. May I suggest Proteus?

Mon, 01/24/2011 - 20:03 | 900721 Hephasteus
Hephasteus's picture

Ya ya ya. The chess game is all in play. Huge recovery, check, falling gold price check. Raising interest rates check. The big lie is all set up. Now all you gotta do is jack those interest rates up and hope we don't leave you sitting there pulling on your puts putz. You need to get that Jesus guy off his ass and tell me about these strong delusions he's going to be sending me. Cause the illusion just isn't sticking to me. Must be too much peanut butter in my diet.

Mon, 01/24/2011 - 21:05 | 900960 Exposer of Inte...
Exposer of Internet Shills's picture

How do you lose money holding MONEY??  This is a shill and a half

Mon, 01/24/2011 - 19:07 | 900494 TruthInSunshine
TruthInSunshine's picture

There is a whisper rumor that Obama is going to claim that the "state of our union is strong," that the economy is recovering nicely, that employment is rising, that small businesses are thriving again, that Iraq and Afghanistan are now stable democracies and massive victories for the U.S., that Gulf Shrimp are perfectly safe to eat and that the the U.S. will see a budget surplus just in time for the 2012 election cycle.

Mon, 01/24/2011 - 19:57 | 900704 goldmiddelfinger
goldmiddelfinger's picture

Somewhere a serf needs discipline

Tue, 01/25/2011 - 00:01 | 901569 tmosley
tmosley's picture

Been a bad boy, have you?

I would suggest you join Redneck at the local gay biker bar.

Mon, 01/24/2011 - 20:39 | 900845 JohnG
JohnG's picture

In other words, he'll lie his teleprompting ass off, and there will be clapping.

It'll be interesting to see of the SCOTUS is present after last years gaffe.

I'd also like to see Wilson scream "You lie!!" repeatedly until he's removed by the SAA.

Everybody could also just turn thier chairs around while the O speaks, now that would be funny!

Mon, 01/24/2011 - 18:58 | 900455 Double down
Double down's picture

This is good.  I would prefer the attention to gold and silver prices to die down.  Their most stable price advances occur by way of stealth.   

Mon, 01/24/2011 - 19:58 | 900709 goldmiddelfinger
goldmiddelfinger's picture

This is stealthy attention?

Mon, 01/24/2011 - 19:17 | 900548 e_u_r_o
e_u_r_o's picture

what will happen if QE2 ends and it would be told there will be no more QE coming.

Tue, 01/25/2011 - 05:48 | 901918 damijan
damijan's picture

Stock market crashes, PMs crash.

Mon, 01/24/2011 - 19:21 | 900549 casey13
casey13's picture

As Jim Rickards keeps saying.

The fed never said that QE2 would end in June

Just that it would continue at least until then.

Mon, 01/24/2011 - 19:18 | 900550 gwar5
gwar5's picture

Only in a perfect world.....

There are too many bubbles, crises, and instability looming globally for any report or predictions to be relied upon.

Mon, 01/24/2011 - 19:21 | 900561 pitz
pitz's picture

Motherfuckers just trying to scare people out of the stuff they're buying.

Mon, 01/24/2011 - 19:21 | 900562 Al89
Al89's picture

Waiting to buy the fucking dip when it comes to Silver and Gold futures and equities. 

Mon, 01/24/2011 - 19:22 | 900569 goldmiddelfinger
goldmiddelfinger's picture

Gold. Gold will br CRUSHED. GS joins the call, late, but joins the call. This won't be bullish. (See "Russia To Increase Gold Holdings By 13% In 2011, Will Buy 100 Tonnes Of Gold Each Year"

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