Golden Showers As Goldman Tells Clients To Sell Gold

Tyler Durden's picture




 

It's around that time of day again - when precious metals are sold hard for whatever reason you care to come up with (collateral requirements, margin calls, alchemy perfected). However, today there is a more mundane reason: Goldman Sachs has suggested its clients sell Gold on the basis that the gold cycle will turn in 2013 thanks to improving US growth offsetting the need for further Fed easing. Of course, Goldman telling its clients to 'sell gold' means Goldman is...

 

 

Via Goldman:

Gold prices range bound in 2012 despite perfect set up

Gold prices have remained range bound in 2012, despite a steady decline in US real rates and rise in central bank holdings that would ordinarily be supportive. To understand this dislocation we expand our modeling of gold prices to include the impact of the US Federal Reserve easing. We find that gold prices “look through” easing that does not require Fed balance sheet expansion –like Operation Twist – increasing instead on announcements of easing through expansion on the Fed’s balance sheet.

 

Improving US growth outlook offsets further Fed easing

Our economists forecast that the US economic recovery will slow early in 2013 before reaccelerating in the second half. They also expect additional expansion of the Fed’s balance sheet. Near term, the combination of more easing and weaker growth should prove supportive to gold prices. Medium term however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth. Our expanded modeling suggests that the improving US growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013. Risks to our growth outlook remain elevated however, especially given the uncertainty around the fiscal cliff, making calling the peak in gold prices a difficult exercise.

 

Gold cycle likely to turn in 2013; lowering gold price forecasts

We lower our 3-, 6- and 12-mo gold price forecasts to $1,825/toz, $1,805/toz and $1,800/toz and introduce a $1,750/toz 2014 forecast. While we see potential for higher gold prices in early 2013, we see growing downside risks. As a result, we find that the risk-reward of holding a long gold position is diminishing and recommend rolling our long Dec-12 COMEX gold position into a long Apr-13 position and selling a $1,850/toz call to finance a $1,575/toz put to protect against a decline in gold prices. Since 2009, this strategy achieved a better Sharpe ratio than a long gold position.

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Wed, 12/05/2012 - 10:21 | 3035312 LawsofPhysics
LawsofPhysics's picture

Paper gold?  Yes I agree, sell that shit or take delivery.

Wed, 12/05/2012 - 10:22 | 3035320 Pladizow
Pladizow's picture

Tungston Sachs!

Wed, 12/05/2012 - 10:39 | 3035400 N. B. Forrest
N. B. Forrest's picture

This can mean only one thing.  Goldman is buying gold.

 

Take that you muppets.

Wed, 12/05/2012 - 10:43 | 3035418 Harlequin001
Harlequin001's picture

'Sell gold"...

and buy silver...

OR

keep gold...

and buy more silver...

Wed, 12/05/2012 - 11:07 | 3035514 strannick
strannick's picture

Hmm yes. Improving economy, less government spending and so less need for QE, therefore declining gold price. Got it. 

GoldmanSachs, friend of the workin man, we're all in this together. Thanks Goldman.

Wed, 12/05/2012 - 11:12 | 3035573 BLOTTO
BLOTTO's picture

But, but here in the Greater Toronto Area, their are 5 different tv commercials on local 24hr news station advertising and asking me to bring in my Gold (and Silver):

...

-Harold the Jewelry buyer...'let me put cash in your pocket'

-Russell Oliver...aka, 'the Cashman...give you money for your gold ohhh yeaaaa'

-Pinco Gold...'we give the most cash..and u can take that to the bank'

-Oren Jewelers...'you know Oren, ive been to other places, but you give me the most cash

-And some other dude i cant think of his name?

...

And as you can see from my memorizing them all...that they have been on air for quite some time now.

.

If that isnt any indication NOT to sell your PMs...theni dont know what is...

 

Wed, 12/05/2012 - 11:31 | 3035659 CClarity
CClarity's picture

Ummm, typically if anticipate interest rates rise (aka inflation) hold gold as hedge on inflation.  With Abby Cohen calling a bottom in interest rates, that suggests she thinks Fed will tighten (or at least let rates find a non hyper manipulated level) and I'm sure if GS is going along with that call, the firm firmly intends to make competitive dealer bids for their customer offloads - - - and promptly move those purchases of gold from the dealer acct into GS investment portfolio - probably in Switzerland or Kyle Bass' UT vault.

Wed, 12/05/2012 - 12:22 | 3035880 Stackers
Stackers's picture

This is just the cartel trying to ramp the metals lower ahead of the QE4 announcement next week by the Fed out right monetizing $45bil/mnth in U.S. debt next year with probably the tag line of "and will continue as long as economic conditions remain slugish" or similar.

Wed, 12/05/2012 - 12:29 | 3035910 fourchan
fourchan's picture

lol if sachs is saying "sell", you know it is buying hand over fist, against its own clients who are idiots.

Wed, 12/05/2012 - 13:38 | 3036233 old naughty
old naughty's picture

You guys totally confused me.

Do we follow the squids, or don't we?

Never mind, I'd never like them.

Wed, 12/05/2012 - 14:49 | 3036539 Diogenes
Diogenes's picture

You can  always make money fading Goldman's tips.

Wed, 12/05/2012 - 17:50 | 3037303 Catflappo
Catflappo's picture

Interest rates more-or-less at zero, and someone is calling a 'bottom' in them.

No shit, Sherlock.

Wed, 12/05/2012 - 10:42 | 3035420 phalfa5
phalfa5's picture

the golden fleece

Wed, 12/05/2012 - 14:51 | 3036551 SmallerGovNow2
SmallerGovNow2's picture

Fuck GS...  or... Thanks GS for driving the price down so I can load up and BTFD...

Wed, 12/05/2012 - 10:44 | 3035424 DoChenRollingBearing
DoChenRollingBearing's picture

Since bearings don`t pee, the best I can do is ooze grease, and maybe fling some dirt, onto Goldman Sachs.

Wed, 12/05/2012 - 10:44 | 3035425 ParkAveFlasher
ParkAveFlasher's picture

The corn call from an earlier posting is ridiculous.  The company I work for lists ethanol prices as a key driver to our costs for raw materials.  I am in that buyer's office weekly to check his head. 

The supposed drought-driven corn shortage is a fallacy.  Crops that were to be lost in the northern areas were planted and harvested in the south.  I had hedged on our products' estimates as early as July but the buyer has reported net impact of drought is not nearly as worse as expected. 

As I said on the the GS reco's, I'll happily trade the reverse on that list of goods from that earlier post, and I'll happily buy any gold that anyone here is selling.

Bitchez.

Wed, 12/05/2012 - 11:38 | 3035692 jimijon
jimijon's picture

Be careful... the drought isn't over.

Wed, 12/05/2012 - 12:05 | 3035817 ParkAveFlasher
ParkAveFlasher's picture

We buy alcohol.  Our vendor's ethanol suppliers price a year forward. 

Wed, 12/05/2012 - 12:32 | 3035931 fourchan
fourchan's picture

my ounces laugh at these "price of ponzie paper" fluctuations.

Wed, 12/05/2012 - 11:24 | 3035484 Anasteus
Anasteus's picture

Sell paper shit and buy physical. The price cannot be better.

Idiotic Goldman Sucks... the China's best friend.

Wed, 12/05/2012 - 16:16 | 3036920 supermaxedout
supermaxedout's picture

Dreck-Sacks

Wed, 12/05/2012 - 10:23 | 3035323 GetZeeGold
GetZeeGold's picture

 

 

How much paper can we put you down for?

Wed, 12/05/2012 - 10:36 | 3035380 LawsofPhysics
LawsofPhysics's picture

As much physical as you are willing to part with.

Wed, 12/05/2012 - 10:36 | 3035387 EL INDIO
EL INDIO's picture

It ain’t even paper !

Wed, 12/05/2012 - 10:40 | 3035407 Jreb
Jreb's picture

Digital Gold....

Wed, 12/05/2012 - 10:44 | 3035427 EL INDIO
EL INDIO's picture

Zeros on a hard drive !

Wed, 12/05/2012 - 11:55 | 3035766 smlbizman
smlbizman's picture

this kinda reminds me of a horse race...one horse leads everystep of the way except the step that counts....the last one..

Wed, 12/05/2012 - 22:36 | 3038018 WmMcK
WmMcK's picture

And every great journey also ends with a single step.

Wed, 12/05/2012 - 10:42 | 3035415 Ookspay
Ookspay's picture

Keep talkin' Goldman, physical is taking off big time...

Wed, 12/05/2012 - 10:48 | 3035446 davinci7_gis
davinci7_gis's picture

Good....sell the paper and make the physical get back down to $1550 and I will simply buy more physical...like the Chinese!

Wed, 12/05/2012 - 11:24 | 3035624 HoofHearted
HoofHearted's picture

We're all (for some reason the striketrough isn't showing when it posts, but imagine the next word struck through) Keynesians Chinese now.

Wed, 12/05/2012 - 11:57 | 3035775 Mesquite
Mesquite's picture

And the South Korea cb...

 

Wed, 12/05/2012 - 11:17 | 3035590 WhiteNight123129
WhiteNight123129's picture

How to catch Goldman Sachs with its pants down?

 

IF THERE IS LESS NEED FOR THE FED TO EASE, GOLDMAN SHOULD RECOMMEND PEOPLE TO SHORT THE TREASURIES.  (LESS NEED TO REPRESS YIELDS), ARE THEY DOING THAT?

Liar pants on fire!

 

Wed, 12/05/2012 - 10:21 | 3035315 unwashedmass
unwashedmass's picture

okay, the muppets who fall for this one, really, really, really deserve to be fleeced. 

 

the moon really is made of cheese, isnt' it? 

Wed, 12/05/2012 - 10:32 | 3035367 EscapeKey
EscapeKey's picture

Everyone deserves to be fleeced, except for the primary banks in the market.

* This message has been brought to you by the SEC & CFTC.

Wed, 12/05/2012 - 10:22 | 3035318 Xibalba
Xibalba's picture

Yes please.  So we're goin $2400 soon then?

Wed, 12/05/2012 - 10:25 | 3035338 Sauk Leader
Sauk Leader's picture

Where is the Anti Goldman ETF

Wed, 12/05/2012 - 10:41 | 3035414 edifice
edifice's picture

Not there and, if it were, Goldman would own it.

Wed, 12/05/2012 - 11:18 | 3035603 mick_richfield
mick_richfield's picture

PHYS and PSLV.

Wed, 12/05/2012 - 15:06 | 3036609 FoeHammer
FoeHammer's picture

Noose Corp.

By the people, for the people.

Wed, 12/05/2012 - 10:22 | 3035319 DollarDive
DollarDive's picture

Hey citi firing 11,000.... a sure sign of economic improvement

Wed, 12/05/2012 - 10:22 | 3035322 Jacque Itch
Jacque Itch's picture

Somehow this was leaked yesterday.  Imagine that!?!?!?!?

Wed, 12/05/2012 - 10:23 | 3035328 fonzannoon
fonzannoon's picture

So is it a "generational selling opportunity"?

Wed, 12/05/2012 - 10:25 | 3035339 icanhasbailout
icanhasbailout's picture

you may never have an opportunity to get fleeced like this ever again!

Wed, 12/05/2012 - 10:34 | 3035375 Pairadimes
Pairadimes's picture

Yea, you will.

Wed, 12/05/2012 - 11:31 | 3035664 Bastiat
Bastiat's picture

.... If you have any money left.

Wed, 12/05/2012 - 10:23 | 3035331 Pairadimes
Pairadimes's picture

BTFGD.

Wed, 12/05/2012 - 10:24 | 3035333 Karlus
Karlus's picture

Makes sense. The govt should also increase corporate taxes to take advantage of the windfall coming to corporations because of economic prosperity.

More Goldman muppetry

Wed, 12/05/2012 - 10:25 | 3035334 semperfi
semperfi's picture

time to back up the truck again - thanks GSAX !!!  ;)

Wed, 12/05/2012 - 10:25 | 3035336 MeanReversion
MeanReversion's picture

So a three month target of 1825 = sell?

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