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Goldman Buying Gold, Selling Treasurys To Muppets Whom It Advises To Do Opposite

Tyler Durden's picture




 

There was a brief period of confusion for a while when Goldman didn't have clear muppet-stomping trades on the book, and those who wished to frontrun the Goldman prop desk (and do the opposite of the muppet flow) were stuck furiously scratching their head. And granted while it's not a "Stolper", tonight we got two gifts (in the parlance of Whitney Tilson) with Goldman first telling its clients to sell gold following Goldman's lowering of its price target for the yellow metal (which as always means the hedge fund known as Goldman is buying what its clients are selling). And then, moments ago, we also learned that Goldman is also selling the 10 Year, which it advise muppets to buy.

First on gold:

Given gold’s recent lackluster price action and our economists’ expectation that the acceleration in US growth later this year to above-trend pace will support US real rates, we are lowering our USD-denominated gold price forecast once again. Our new forecast is further below the forward curve with year-end targets of $1,450/toz in 2013 and $1,270/toz in 2014. As a result, we recommend closing the long COMEX gold position that we first initiated on October 11, 2010 for a potential gain of $219/toz, with the risk reversal overlay expired on March 25. Our long-term gold price forecast (2017+) remains at $1,200/toz: while higher inflation may be the catalyst for the next gold cycle, this is likely several years away.

Or several months ago if you are the price of unleaded gas in Tokyo and pretty much anything else. It gets better:

While there are risks for modest near-term upside to gold prices should US growth continue to slow down, we see risks to current prices as skewed to the downside as we move through 2013. In fact, should our expectation for lower gold prices continue to prove correct, the fall in prices could end up being faster and larger than our forecast, as aggregate speculative net long positions across COMEX futures and gold ETFs remain near record highs. We therefore recommend initiating a short COMEX gold position as our ECS Top Trade #8, implemented through an S&P GSCI® front-month rolling index to further benefit from the contango in the COMEX future curve, targeting a move to $1,450/toz with a stop at $1,650/toz. While we may be end up too early in entering this trade, we prefer that to being late given our belief that the skew to current prices is to the downside.

Remember, however, to please execute the trade with your friendly Goldman trader, who will gladly buy all the gold you have to sell all the way down to $1450.

And just out moments ago, Goldman goes bearish (like everyone else) on the 10 Year - because you see, nobody has heard of the perpetually wrong "Great Rotation" call in 2010... or 2011... or 2012.... or 2013... Or at least Goldman clients haven't. And apparently not the Fed, which just can't get enough of buying just this.

We recommend going short 10-year US Treasuries via June futures (TYM3) at the current level of 132-20 for an initial price target of 130-00 and stops on a close above 134-00. In yields space, the corresponding move is from the current 1.76% to around 2.10%, and stops on a close around 1.60% - corresponding to the lows from last November.

 

The rationale for our recommendation rests on the following four considerations:

  • The valuation case for shorting Treasuries has become more compelling after the decline in yields following a worse-than-expected US jobs report and the BoJ’s easing. Our assessment of the macroeconomic outlook for the US and the main advanced economies has not changed; if anything, it has improved following the large fiscal and monetary stimulus in Japan.
  • The market appears to have already factored in a softening in US growth during the second quarter, after a stronger-than-expected first quarter. Our US GDP Growth Basket (a ‘tracking portfolio’ of US real GDP growth) has retraced all the gains recorded between last November and mid-February. This should protect the trade should the forthcoming batch of macro data, starting with retail sales this Friday, be weaker than earlier in the year. That said, a near-term risk to the trade stems from an escalation of tensions in North Asia. So far, these developments appear to have had a small impact on global asset prices.
  • We think the most persistent part of the BoJ's ‘surprise’ is a flattening of the 10s-30s segment of the yield curve. This is mostly a domestic play, with limited spill-over effects for overseas fixed income markets. We have likened this move to that resulting from the Fed’s ‘Operation Twist’: the slope of the ultra-long-end of the Treasury has remained in a 60-80bp range, while the level of 10-year yields has moved around. Interestingly, 10-year Japanese yields are heading back to pre-BoJ announcement levels.
  • Treasury bond futures have tried to break above the upper end of a broad price range in place since July 2012, and failed. Short positioning in the rates market is lighter, according to anecdotal evidence.

Thank you Goldman - we can always rely on you.

 

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Wed, 04/10/2013 - 07:28 | 3430150 Bearwagon
Bearwagon's picture

Same old, same old: Do as they do, not as they say.

Wed, 04/10/2013 - 07:29 | 3430155 Rubicon
Rubicon's picture

Are Goldman clients generally retarded?

Wed, 04/10/2013 - 07:31 | 3430159 GetZeeGold
GetZeeGold's picture

 

 

We like to call them....special.

Wed, 04/10/2013 - 07:38 | 3430184 MagicHandPuppet
MagicHandPuppet's picture

But no one will pity the muppet.

Wed, 04/10/2013 - 07:48 | 3430203 Croesus
Croesus's picture

Surprised GS didn't recommend their clients go long bitcoin.

Wed, 04/10/2013 - 07:51 | 3430210 GetZeeGold
GetZeeGold's picture

 

 

They'll sell them Bitcoins.....but they have to pay in gold.

Wed, 04/10/2013 - 11:03 | 3431377 12ToothAssassin
12ToothAssassin's picture

I thought the rule was to always do the opposite of what Goldman suggests?

Wed, 04/10/2013 - 07:51 | 3430213 GrinandBearit
GrinandBearit's picture

The moment they do bitcon will crash.

Wed, 04/10/2013 - 07:54 | 3430220 GetZeeGold
GetZeeGold's picture

 

 

Dude....you're gonna jinx the ponzi!

Wed, 04/10/2013 - 10:23 | 3431053 Lugnut
Lugnut's picture

stop harshing my buzz

Wed, 04/10/2013 - 07:51 | 3430216 malikai
malikai's picture

They won't do that until they already have a sizeable holding to sell.

Which helps explain the interesting silence from the bank "community" re BTC.

Wed, 04/10/2013 - 08:28 | 3430303 Croesus
Croesus's picture

The banking community will never adopt bitcoin......they may be corrupt, they may be assholes, but they're not stupid.

They'd just unveil their own system, since they already have wide distribution channels in place, plus the subservience of politicians everywhere (who could legally mandate the bank's version).

ALL governments are feeling the pinch, and looking for ways to increase their revenues.......so if you Bitcoiners think tax-free status is going to stay with BTC indefinitely, you're only kidding yourselves. 

Like I've said in other places: "It's a big club, and you ain't in it."

Wed, 04/10/2013 - 08:52 | 3430449 Anasteus
Anasteus's picture

The good news, however, is that no one will be asking the banks for their opinion.

Wed, 04/10/2013 - 09:39 | 3430753 Urban Redneck
Urban Redneck's picture

Bitcoin doesn't have any tax-free status in the US (or worldwide for US citizens/taxpayers).

Wed, 04/10/2013 - 12:35 | 3431935 Ayr Rand
Ayr Rand's picture

How do you know that the banks did not buy 90% of the bitcoin back when it was $0.14 each?

Wed, 04/10/2013 - 07:53 | 3430221 toys for tits
toys for tits's picture

It's too early, wait 'til BTC peaks.

Wed, 04/10/2013 - 07:32 | 3430166 Bearwagon
Bearwagon's picture

Maybe they're just illiterate.

Wed, 04/10/2013 - 08:00 | 3430234 Downtoolong
Downtoolong's picture

Are Goldman's clients retarded?

Just the Muppets and desperate ones, which they fry up and serve to their really important clients who pay them the biggest fees and commissions.

Wed, 04/10/2013 - 09:28 | 3430695 deKevelioc
deKevelioc's picture

Waiting for Stopler to make a call on Bitcoin.  I suspect he would advise going long.

Wed, 04/10/2013 - 09:48 | 3430818 DaveyJones
DaveyJones's picture

"Are Goldman clients generally retarded?"

perhaps, but so is a society that tolerates these folks

Wed, 04/10/2013 - 07:28 | 3430153 darteaus
darteaus's picture

[Gasp!]  Really?

Wed, 04/10/2013 - 07:34 | 3430167 Bearwagon
Bearwagon's picture

Of course!

Wed, 04/10/2013 - 07:27 | 3430154 buzzsaw99
buzzsaw99's picture

Damn they despise and abuse their clients.

Wed, 04/10/2013 - 07:31 | 3430162 swissaustrian
swissaustrian's picture

Gold price analysts should just stop predicting, here's their track record from 2007-2012

http://www.pmbug.com/forum/f2/%5Bchart%5D-financial-analyst-gold-price-f...

Wed, 04/10/2013 - 07:32 | 3430163 MFLTucson
MFLTucson's picture

Noone is stupid enough to listen to these courrpt Jews.

Wed, 04/10/2013 - 07:34 | 3430170 GetZeeGold
GetZeeGold's picture

 

 

You should look into a Benjamite broker.....those cats are great.

Wed, 04/10/2013 - 07:41 | 3430185 css1971
css1971's picture

Wow. Two spelling mistakes, bigotry and completely wrong, all in a single sentence.

Wed, 04/10/2013 - 07:45 | 3430194 MFLTucson
MFLTucson's picture

You suggest that spelling errors are indicative of bigotry?  Well, jack off, I am Jewish myself!  I hate that group and I hate what the Jewish money changers have done to America so, get F__!

Wed, 04/10/2013 - 08:03 | 3430241 GetZeeGold
GetZeeGold's picture

 

 

Well....there you go.

 

The tribe of Judah has spoken. As usual...the tribe of Dan is sleeping in....again.

Wed, 04/10/2013 - 07:31 | 3430165 bingo was his name
bingo was his name's picture

Does this mean Goldman is going put out some "We Buy Gold" signs in front of all their buildings

Wed, 04/10/2013 - 07:33 | 3430172 Bearwagon
Bearwagon's picture

No, this means, they just did that ...

Wed, 04/10/2013 - 07:45 | 3430180 GetZeeGold
GetZeeGold's picture

 

 

Not only do they buy gold....but they'll extract your gold filled teeth for free.

 

50 cents on the dollar.......less if you want something for the pain.

Wed, 04/10/2013 - 07:41 | 3430187 mayhem_korner
mayhem_korner's picture

 

 

For the sheep that giddily go into those "We Buy Gold" shops to get an injection of fiat, I wonder if it ever occurs to them to ponder why someone would be in business to buy something.

Wed, 04/10/2013 - 09:53 | 3430855 DaveyJones
DaveyJones's picture

no, their placard says "we buy governments"

Wed, 04/10/2013 - 07:36 | 3430177 The Dancer
The Dancer's picture

But but but but, so what is Bill Gross up to, front and center on Market Watch saying he is bullish on all that paper....so, what's a guy to believe....could they be talking their book, looking for someone to take the other side of their trade in possibly thin markets.....

Wed, 04/10/2013 - 07:37 | 3430179 buzzsaw99
buzzsaw99's picture

If this doesn't scream out to sell stawks and buy Ts and gold I don't know what else to say.

Wed, 04/10/2013 - 07:38 | 3430182 Dr.Engineer
Dr.Engineer's picture

Can someone explain to me how GS can continue to make up these forecasts and still retain some sort of reputation?  Why do people hold their money with these guys?

Wed, 04/10/2013 - 07:40 | 3430186 buzzsaw99
buzzsaw99's picture

It is a way to buy influence in D.C..

Wed, 04/10/2013 - 07:42 | 3430189 swissaustrian
swissaustrian's picture

Because most of them are institutional investors who are managing money on behalf of other people. It's not their money. Take for example the Norwegian sovereign wealth fund, a $600bn behemoth. They got effed in subprime and in PIIGS bonds by GS and they're still clients. They're not getting paid for performance, but for AUM.

Wed, 04/10/2013 - 07:50 | 3430206 Dr.Engineer
Dr.Engineer's picture

Swissaustrian, thank you for this insight.  What you measure you improve.  So they aren't measured against this.  Wow.  There is no feedback in the system and that is why things are freewheeling.

I am stunned.

Wed, 04/10/2013 - 08:09 | 3430264 Downtoolong
Downtoolong's picture

Yep, if these money managers follow Goldman's advice they are safe, even if they lose money like everyone else. If they go against Goldman they can be fired, even if they are right, and especially if they are wrong.

Goldman exists to work these psychological arbs in the investment world to the max, primarily for their own gain. And just like the individual voter in our government system, the individual investor has little say or influence in the process or the outcome.  

Wed, 04/10/2013 - 09:59 | 3430899 DaveyJones
DaveyJones's picture

There are many "talented" folks but orange county remains one of the more idiotic institutional investors. I blame Disney

Wed, 04/10/2013 - 07:52 | 3430214 scatterbrains
scatterbrains's picture

The forecasts are just cover and provide an alibi for public pension fiduciaries  to disperse retiree funds to them (with the promise of a cushy job when they leave their official gov. positions in a few years) This way if anyone should ever grill them on how they managed to lose so much money they can say it was Goldman's fault blah blah blah.

Wed, 04/10/2013 - 08:41 | 3430390 augustusgloop
augustusgloop's picture

Forecast is clever: sets target just below the critical support level (1530-1536 or thereabouts) for gold or roughly 3% change from gold's current price Bold call! If gold goes down, they can keep forecast. If gold rallies, they can update forecast on new data (economy deteriorating, debt monetezaton), saying gold came within 3% of their forecast. When gold continues its uptrend, they have it in their personal vaults.

I prefer Soros's far more nuanced comments. After saying gold wasn't working against cyprus like disasters (it wasn't) he further stated that he didn't think it would go down based on central bank buying. 

Wed, 04/10/2013 - 08:49 | 3430436 monopoly
monopoly's picture

Excellent question and I wish I had the answer. Thank goodness Lloyd had enough spare cash to buy another home, in the Hamptons. Now that is growth. 

Wed, 04/10/2013 - 07:43 | 3430193 buzzsaw99
buzzsaw99's picture

And right on cue Bill Gross turns bullish on the 10Y. omg lol hahahahahaha!!

Wed, 04/10/2013 - 08:41 | 3430403 knukles
knukles's picture

Means Goldie is working Gross's 10yr tsy sell program

Wed, 04/10/2013 - 07:45 | 3430197 Silverhog
Silverhog's picture

They are so good at guessing the price of Gold in 2014 but no guessing on the size of the national debt in 2014.

Wed, 04/10/2013 - 07:51 | 3430215 mayhem_korner
mayhem_korner's picture

 

 

Once all of the manipulation passes away, the correlation between the rise in (global) government debt and gold prices will emerge.  The rest is a frontal assault to get weak hands to cave to group-think.  For me, when the panicked CBs and their agents play hammer time on PMs, I just pull up the usdebtclock site and polish my stack.

Thu, 04/11/2013 - 22:14 | 3439300 MeelionDollerBogus
MeelionDollerBogus's picture

In history I’ve never known of a non-manipulated market. The shift may leave something appearing unmolested for a time but to decide the market itself won’t be manipulated is… naïve.

Wed, 04/10/2013 - 07:46 | 3430199 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Just caught up with my ole mate Rip Van Winkle; hadn't seen him in about 30 years!. He reckons the markets the markets are alot more fucked than he remembered and he intends to take some Imovane...asked him to leave me some.

Wed, 04/10/2013 - 07:51 | 3430209 Bearwagon
Bearwagon's picture

Unless you're suffering from massive insomnia, Imovane won't do you any good. Better take a walk in the park.

Wed, 04/10/2013 - 07:51 | 3430217 MFLTucson
MFLTucson's picture

Want to get sick?  Read the first line of this article.  Goldman Sachs is a cesspool of liars and cheats!  http://www.reuters.com/article/2013/04/10/markets-precious-idUSL3N0CXCBK20130410

Wed, 04/10/2013 - 07:55 | 3430223 Disenchanted
Disenchanted's picture

Yes but, 'God's Work' must be carried on...

Wed, 04/10/2013 - 07:55 | 3430224 Vooter
Vooter's picture

I just KNEW we shouldn't have executed that McVeigh guy...

Wed, 04/10/2013 - 08:08 | 3430269 Quinvarius
Quinvarius's picture

I can tell you for a fact, gold will never see 1270.  That price implies the US dollar money supply will only be 8% backed by gold at the end of the year.  It has never been that low.  The last time it got to 11% the entire system collapsed with the tech bubble and we went into a 13 year depression which continues to this day.  Then gold prices exploded.  The system requires a credible backing of gold.  8% implies a massive bubble in all assets other than gold.  And the one we have now is already cracking.

You are crazy if you are not buying gold.  This is a 85% discount already.  Owning physical with no leverage "is" massive leverage vs what has to happen.  Physical is so mispriced, it is as good as an option here.   

Wed, 04/10/2013 - 10:53 | 3431290 Vooter
Vooter's picture

Agreed. Physical is being vacuumed up at the current price, and the vacuuming will only intensify as the price goes down. Keep stacking--they're desperate...

Wed, 04/10/2013 - 11:35 | 3431578 DosZap
DosZap's picture

http://bullmarketthinking.com/comex-gold-inventories-collapse-by-largest-amount-on-record/

Gosh, wonder why someone would take delievery of all that cheap falling price shit?.

Wed, 04/10/2013 - 08:15 | 3430295 Hail Spode
Hail Spode's picture

Goldman did put out a memo to its people not to call their clients "muppets" anymore.* *nothing was said about not TREATING them like muppets, just don't call it that.

Wed, 04/10/2013 - 08:23 | 3430338 blindman
blindman's picture

it is all part of the market makers function, this
disemboweling and denuding of the usa and the dollar.
global markets have a broader time line and greater
scope so what appears to be fraud and duplicity, political
treason and subversion of the legal system are merely
fleeting adjustments to temporal market conditions.
lets review. the money system is hijacked then perverted
and poisoned, the political process is distorted and bought
along with the legal system and education system. the media
and information systems are controlled and diluted and centralized.
production is removed and offshored along with finance and
wealth accumulation.
then the price of gold is manipulated, all pricing and price
discovery made opaque and the assets are sold artificially low
to asia? etc... while the reputation and welfare of the usa goes quietly
down the toilet, as it has become the hit man nation for hire,
even having done a hit job or two on its own citizens in its
own cities. all along the people or populations see nothing as
they can not differentiate between conspiracy as a crime and conspiracy
as a theory. some how they have never realized of forgot that
there are actual crimes that people commit, and some are conspiracies,
and the perpetrators of these crimes do not have eye patches or
wear hoodies and sometimes these people do not suffer guilt and then
confess.
speaking of confessions , what made b. Madoff confess so quick?
he was just making a market.
.
Bernie Madoff.
.
when the country formerly known as the sua/ strike that, usa is
completely shelled out and in debt and thoroughly detested by
every other nation in the world, has sold all it resources and
assets and all its citizens are debt serfs with all its wealth
transferred to offshore accounts or foreign powers then I suppose
the great work of our market makers and monetary authorities
will be completed.
,
then Bernie Madoff gets his pardon and can run for office, buy
an election somewhere like new York city or Washington d.c..

Wed, 04/10/2013 - 08:26 | 3430347 Silverhog
Silverhog's picture

Goldman never once mentions the word "Physical" I'm inclined to believe paper Gold will be down if not worthless in 2014.

Wed, 04/10/2013 - 08:34 | 3430376 jjsilver
jjsilver's picture

All they have is paper, no physical. Another act of desperation, massive physical withdrawals from the LBMA and crimex, default coming

Wed, 04/10/2013 - 08:39 | 3430393 Esso
Esso's picture

SNAGU, bitchez!

(Situation Normal, All Goldman'd Up!)

Wed, 04/10/2013 - 08:46 | 3430417 Plata is money
Plata is money's picture

Their calls are often right short-term. For example, the short gold call a few months ago was a solid bet with a stop at 1650. Am I the only one seeing this? With this new bet, maybe we get one more strong spike lower before the rally higher? Maybe they need to get Cramer to tout the same horseshit on TV today?

Long term and medium term they constantly fail, but that is the idea isn't it? Sucker in fish, then make real money.

Wed, 04/10/2013 - 09:48 | 3430820 Quinvarius
Quinvarius's picture

Actually it immediately went up 50 points last time they said sell.

Wed, 04/10/2013 - 08:46 | 3430424 monopoly
monopoly's picture

"The acceleration of growth later this year". Ahh, yes, I see that. Growth in the unemployment rolls, growth in Federal disability claims, growth in food stamps, growth in our debt and of course growth in the great new budget, spelled (spending). Good call Goldman, and no one gets indicted for fleecing their clients.

Gotta love this new Amerika!

Wed, 04/10/2013 - 08:48 | 3430425 Rustysilver
Rustysilver's picture

If I had a bit-coin for every time GS prop desk and GS pronouncements differ; I would have a lot ....

Thu, 04/11/2013 - 22:11 | 3439294 MeelionDollerBogus
MeelionDollerBogus's picture

even more needed after the crash for the same fiat value...

Wed, 04/10/2013 - 08:57 | 3430473 rsnoble
rsnoble's picture

There's just no shortage of muppets it seems.  And when there is we will get outright theft like Cyprus. 

Wed, 04/10/2013 - 09:42 | 3430784 moneybots
moneybots's picture

And don't forget, Greenspan told the public to buy stocks.

 

IBD shows 6 distribution days over the last few weeks in both the Nasdaq and SP500.  Remember what happpened after Greenspan told home buyers to get adjustable rate loans.

Wed, 04/10/2013 - 09:59 | 3430900 Al Huxley
Al Huxley's picture

Where can I get some of this gold that the GOLDMAN is selling?  Because my usual sources are all out of stock.   Or perhaps they have some nice paper gold to sell me - which has the advantage of being light-wieght, value-less, and hence risk-free to store, and available in infinite quantities.  Fuckheads.

Wed, 04/10/2013 - 10:06 | 3430938 AlphaHunter001
AlphaHunter001's picture

"Goldman recommended closing a long Comex gold position initiated on Oct. 11, 2010"

 

I don't know what everyone is jumping on GS for, that's a pretty damn good call from the fall of 2010.

 

How many suckers bought gold at over $1800 an ounce? LoL

Wed, 04/10/2013 - 10:56 | 3431312 Vooter
Vooter's picture

"I don't know what everyone is jumping on GS for, that's a pretty damn good call from the fall of 2010."

We're jumping on GS because they EXIST.

Thu, 04/11/2013 - 22:11 | 3439292 MeelionDollerBogus
MeelionDollerBogus's picture

I know of only one but the buying isn’t the sucker part, it’s the non-hedging. I warned that one can hedge (and should) using GLD calls or puts. I had none yet was selling gold at that 1800 level bought in at 1300 net of all fees for delivery, insurance, currency conversion. I would have preferred to buy, not sell, and would have used GLD puts alongside it (which would have been just fine) but at the time my finances led me to a sell against my preference. That one who didn’t hedge wouldn’t touch options… well, that’s how things are without hedging but it’s better to have gold than have none. I, for one, prefer to get more gold now I’ve just got more silver delivered in hand & ready for the next boating accident.

Wed, 04/10/2013 - 10:47 | 3431230 The Dancer
The Dancer's picture

ZH is now a "factor" in ALL strategies worked out by many of these big players...just in case ya haven't noticed, they are now reversing their patterns of trading in some markets...don't be channel-visioned...be flexible and watch for their strategy changes...see gold go down...see silver go down...they can't let ZH be proven right every time or THEY will lose creditability...so they will throw some red meat to the suckers on some days to keep some sense of creditability with clients and the masses....don't get locked in...watch the patterns of their trades....ya must stay in/on the curve to be "in their heads"...and that's the most valuable place to be...."in their head"...that's where the fun is...fun is good! Better than money! But not to the greedy;they don't know what fun is!!!!! Egomaniacs live in the own little boxed prison! lol lol

Thu, 04/11/2013 - 22:07 | 3439277 MeelionDollerBogus
MeelionDollerBogus's picture

Indeed, ever since the “no plan B” response to zh on video that’s brought huge attention to ZH & the kinds of questions asked there, and therefore all the related (and proven correct) theories in the questions (comments) and articles.

Also… Bitcoin crash for the muthafuckin win.

As if no one saw that coming …

Wed, 04/10/2013 - 10:58 | 3431338 JohnGaltsChild
JohnGaltsChild's picture

Hmmmm? Switching to JP...........

Gee. I wonder what Blythe has to say about silver??

Bwahhahahahahahahahha!

Thu, 04/11/2013 - 12:26 | 3436905 katchum
Do NOT follow this link or you will be banned from the site!