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Golden Showers As Goldman Tells Clients To Sell Gold
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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Yes, sell your gold, serfs, so we can buy it at discount.
(evil laugh)
Whatever Goldman tells you to do, do the opposite. Historically this strategy would have netted you LOTS of $$.
Question: Does Gold-Man have a fat Gold Finger?
Answer: Not today.
More like a fat stinky finger
For Google Chrome browser users...get the "in debt" app. US debt to the penny at a mouse click. Sry, not trolling, really do get a kick out of it. $16,345,202,863,067.49
Hey Goldman. I hope you are reading this.
FUCK YOU, FUCK YOU, FUCK YOU.
The bottom is surely in when these guys are calling for lower prices.
A great analysis of the correlation between "fiscal cliff" headlines and gold prices and the screwed up nature of the algos that trade with truly artificial intelligence:
Rage Against The Machines
Now is when human intelligence can leverage the error of the artificial. Buy on the dips!
O Goldman, that old chestnut... There wouldn't be a single employee at GS that regrets not owning more Gold and less USD... Did an intern figure out that in listless markets where the majority are core long, that you can, through aggressive execution push the prices lower so easily...... seems the partners wanted a little extra "investment" income before year end.... whilst I don't like you GS, I respect your ability to play the game.... For the rest of us the writing on the wall is in font size 14,000...... you CANNOT make us believe that governments can get away with fabricating money to buy their own shit on riduculously MASSIVE size......fuck you I'm loading up all the way down.... fiat is fucked.....bring it!