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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LawsofPhysics's picture

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

N. B. Forrest's picture

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

 

Take that you muppets.

Harlequin001's picture

'Sell gold"...

and buy silver...

OR

keep gold...

and buy more silver...

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.

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...

 

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.

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.

fourchan's picture

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

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.

Diogenes's picture

You can  always make money fading Goldman's tips.

Catflappo's picture

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

No shit, Sherlock.

SmallerGovNow2's picture

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

DoChenRollingBearing's picture

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

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.

jimijon's picture

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

ParkAveFlasher's picture

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

fourchan's picture

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

Anasteus's picture

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

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

GetZeeGold's picture

 

 

How much paper can we put you down for?

LawsofPhysics's picture

As much physical as you are willing to part with.

EL INDIO's picture

Zeros on a hard drive !

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..

WmMcK's picture

And every great journey also ends with a single step.

Ookspay's picture

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

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!

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.

Mesquite's picture

And the South Korea cb...

 

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!

 

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? 

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.

Xibalba's picture

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

Sauk Leader's picture

Where is the Anti Goldman ETF

edifice's picture

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

FoeHammer's picture

Noose Corp.

By the people, for the people.

DollarDive's picture

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

Jacque Itch's picture

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

fonzannoon's picture

So is it a "generational selling opportunity"?

icanhasbailout's picture

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

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

semperfi's picture

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

MeanReversion's picture

So a three month target of 1825 = sell?