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.

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