Goldman Tells Clients To Short Gold 5 Days After Saying Gold May Soar "Much Higher Over Time"

Tyler Durden's picture

What a difference five days makes.

Recall last Wednesday evening, when none other than Goldman decided to be the latest to piggyback on gold's torrid momentum, by saing "there’s scope for the gold price to extend much higher over time." This is what Goldman's chartists predicted:

The current area includes the 100-wma and the trend across the highs since March ’14 (wedge resistance). It’s formed an exhaustive looking candlestick pattern and oscillators seems to be turning. Basically, it seems a good place to start a corrective pullback. The 100-wma in particular was an important pivot in determining the start of the late-’12 decline.



From a wave count perspective, the market is likely in the initial stages of a counter-trend ABC correction which could eventually retrace ~38.2% of the 5-waves from ’11 to 1,381. From a pure techs perspective, breaking from a declining wedge would initiate a medium-term target back at the start of the pattern ~1,392.


Bottom line, although 1,200-1,202 might hold in the near-term, there’s scope to extend much higher over time.

Initially, this troulbed us because whenever Goldman tells clients to do one thing, the firm is doing precisely the opposite. After all, this is the firm whose Top 5 of 6 trade recommendations for 2016 were stopped out at a loss for anyone who followed them 6 weeks into 2016 as we wrote in "Goldman Capitulates: Closes Out 5 Of Its 6 Top Trades For 2016 With A Loss."

How happy, then, we were, if very much unsurprised that less than a week later, as the gold momentum has been briefly snapped, that Goldman's head of commodities has decided to take the other side of Goldman's technical trade, and is now advising Goldman's repeatedly crucified muppets, pardon, clients to short gold. Just moments ago, this is what Goldman's head of commodities said:

As we maintain our view of rising US rates and hence lower gold prices with a 3-month target of $1100/toz and 12-month target of $1000/toz, we are recommending shorting gold through a GSCI-style rolling index. Ironically, gold has a negative yield and such a short would create a positive carry in a world concerned about negative interest rates that made gold rise in the first place. While we acknowledge that fears around systemic risks can push prices higher in the near term, we see such risks not offsetting the potential gain given how extreme pricing has become and the heavy data reporting period in coming weeks that will likely show that the while economic growth has slowed, it is not collapsing to the point to justify such extreme pricing across assets.

So "not collapsing" is the new "green shoots"? Got it. And then this:

We believe that the sharp rise in gold prices this past week was mostly due to concerns over systemic risks, particularly in the banking sector, given the sharp correlation of gold prices with bank stocks and other measures of systemic credit risks. While this is a continuation of a trend established since the beginning of the year that started with systemic concerns over oil and China, we believe that these new fears like the past fears are not justified. As our banks team argues, European banks, which are at the center of concerns over negative interest rates, can fund from the emergency funding facilities put in place in 2012 (the TLTRO remains barely used), money markets are open with no evidence of strain in either euro or dollar funding, while deposit growth is further adding to liquidity. All of this against a backdrop of higher capitalization aided by deleveraging suggests that a crisis re-run is unlikely.

That's funny: remember the last time Goldman was very bullish on banks? It was in November, when going long big US banks was Top Trade #5 of Goldman's 6 trades for 2016. This is what happened there:

Close long large cap US banks through the BKX Index relative to the S&P500 on 11 January 2016, opened on 19 November 2015 at 100, with a potential loss of 5.4%.

Don't worry though, this time Goldman will get it right, promise.

Sarcasm aside, what is more important is that Goldman is now telling its clients to short gold through Goldman. Translation: after a brief period in which Goldman was actually shorting gold when it was telling it clients to buy it, the firm which controls every central banks is once again actively buying every golden ounce, in paper or physical format, its clients have to sell.

Finally, we can't help but muse how right JPM's Marko Kolanovic was once again when just last week the JPM quant said to buy gold with the following amusing comment describing his clueless peers:

The second argument was that of Momentum: “if an asset was going down, it will keep on going down,” We have concluded that many of our competitors rely on momentum in their commodity forecasts (e.g., when oil is $150, they forecast $200; when it is $30, they forecast teens). This type of trend following can always be rationalized (e.g., oil will go down because it is very difficult to store it – so it has to be sold; and Metals will go down because it is very easy to store them – so production will not slow down). While a simple momentum prescription does work most of the time, the key is to assess the likelihood of market turning points during which one can lose years of profits in a matter of days (less painful for a sell-side analyst and more for an investor).

But it works miracles for a sell-side analyst, like Goldman for examples, who also happens to be a prop investor taking the other side of the trade its own analysts recommend.

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Government needs you to pay taxes's picture

The Balsach, shearing the remaining muppetry.

Looney's picture

Gartman Sachs is hard at work!  ;-)


manofthenorth's picture


Looney's picture

There IS a huge difference between Gartman’s “recommendations” and Goldman’s.

Gartman is just an idiot.

Goldman rips everybody off.


SoilMyselfRotten's picture

Ahhh, that's the game. Just like sports betting hotlines, give half your clients one side and the other half the opposing side. Think GS is hoping to retain half its clients after this mess.

Durrmockracy's picture
Durrmockracy (not verified) SoilMyselfRotten Feb 15, 2016 1:27 PM

So when I "short" gold do I just make more stacks... just shorter?

BaBaBouy's picture

>>>>> Fuck Off Vampire SQUID ...

>>>>> MMM... Vampire SQUID Good...

El Oregonian's picture

I can't wait until they serve those calamari Banksters on a plate.


Mr. Universe's picture

Taking a trip in the Wayback machine. 

Plebe #1 "Who owns this fancy spread?"

Plebe #2 "Beats me, but he has a lot of Gold, man!"

It's good to be king, or at least to have a red shield.

French Bloke's picture

My guess is that Goldman pumped the market last week, then shorted. Now they want to cover. What better way than to shaft your customer base yet again by getting them to short further so they can cover at even lower prices?

I suspect there will be a bounce back in price after the current shennanigans are over.

milking institute's picture

Was trying to figure out who was baby seal clubbing the shit out of gold sunday in the middle of the night,the china man?   the yellen man?  silly me,of course the gold man..... when will the spineless miners and the injured investors file a class action and put these crime bosses out of business? never,of course but one can dream.......

Gold Pedant's picture

Bankers manipulating the market and ripping everyone off has been going on for a long time. This post reminds me of one of Griffin's remarks on market manipulation.

   It was well known that the Rothschilds had developed a private
courier service that was used, not only to transport gold and other
tangible cargo, but to rapidly move information that could be useful
in making investment decisions. It was expected, therefore, that
Nathan in London would be the first to know the name of the victor
after the cannon smoke had cleared from the battlefield. And they
were not to be disappointed. The first news of Wellington's victory
arrived in Brussels around midnight on June 18, 1815, where a
Rothschild agent named Rothworth was waiting in readiness. He
immediately mounted a fresh horse and set off for the port of
Ostend where a boat was standing by to speed him across the
channel to London. In the early hours of June 20, the exhausted
messenger was pounding on Nathan's door, a full twenty-four
hours before Wellington's own courier, Major Henry Percy,

   At least one friendly biographer claims that Nathan's first act
was to deliver the news to the Prime Minister, but that government
officials were hesitant at first to believe it, because it ran contrary to
reports they had received previously telling of serious British
setbacks. At any rate, there is no doubt that Nathan's second act of
the morning was to set off for the stock exchange to take up a
position at his usual pillar.

   All eyes were upon him as he slumped dejectedly, staring at the
floor. Then, he raised his gaze and, with pained expression, began
to sell. The whisper went through the crowded room, "Nathan is
selling?" "Nathan is selling." "Wellington must have lost." "Our
government bonds will neverbe repaid." "Sell them now. Sell. Sell!"

   Prices tumbled, and Nathan sold again. Prices plummeted, and
still Nathan sold. Finally, prices collapsed altogether and, in one
quick move, Nathan reversed his call and purchased the entire
market in government bonds. In a matter of just a few hours, he
had acquired the dominant holding of England's entire debt at but
a tiny fraction of its worth.

If it is to be believed, of course......... ;)

(edit: pedantic spelling edit of been)

newbie vampire's picture


Do ya mean in the ear ?

Pairadimes's picture

GS uses the word 'client' like the Soviet Union used it once upon a time when referring to places like Poland or Bulgaria.

chicaboomboom's picture
chicaboomboom (not verified) Pairadimes Feb 15, 2016 1:16 PM

they really hate gold, don't they?

r101958's picture

Gee, I wonder if Goldman thinks there is a war on the horizon? Friggin' lies, propaganda and more lies! What would happen to the price of gold if a full fledged war broke out in the now seems to be happening?

jakesdad's picture

they hate anything that impedes them stealing other people's money - if gold were a catlyst they'd love it!

KnuckleDragger-X's picture

Bending the market for fun and profit......

iggenFlot's picture

Gold will definitely be $1,300/oz. or higher by 2040.

Keep stacking, bitchez!

flyingcaveman's picture

Still better than 24 years of negative interest rates and inflation tax.

Gold Pedant's picture

Annoying troll is annoying. Likely a Robert Rubin intern. Trolling on ZH when he's not busy with other tasks in his "oval office."

iggenFlot's picture

Zero Hedgers are the dumbest of the dumb money. Make no mistake, gold's going higher, but not before it falls to about $500 and bucks off the knuckleheads assembled here, who have squandered their hard-earned retirements on a mirage.

These fools had hoped to be their family's salvation, but instead are its curse.

jaxville's picture

Good Grief....  Iggeflot . You are soon going to learn just how high (expensive) a "stupid" tax can be.

Slave2Fashion's picture

I view physical gold and silver the same way I do an insurance policy. Sometimes you pay more than you think it's worth but it's there if you need it. Realistically speaking, it could lose a lot of it's value, but it will always have value. Companies, stocks and fiat may come and go, but the precious metals seem to endure the test of time. It would be foolish to not have some if you can afford it.

Speculating on what it may do and betting on that, however, is a different matter. I remember the Hunt brothers.

Yung Saver's picture

A phrase which has no meaning to me or my future family:

Short-term Gold Prices

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) iggenFlot Feb 15, 2016 3:29 PM

As soon as Goldman said that gold's value would "soar" you knew which side of the trade they were on.  They dumped their holdings at $1240 and are likely looking to reup around $1050 and round trip again.

open-range's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

JustObserving's picture

If Goldman ever tells the truth, it is by mistake.

Gold wil go higher given QE, NIRP, collapsing stock markets, attempts to ban cash, and falling real estate prices.

Investors Are Flocking To Gold Like There's No Tomorrow

KnuckleDragger-X's picture

Most of the GS lies are through omission. They just aren't telling you the little inconvenient parts.....

Big Beta Bill's picture

The ability to change your mind is a strength not a weakness.  Short the long bond.  

Haole's picture

Come here, go away, come here, go away, come here... Didn't you kill my money?  I saw ya', I saw ya'...

dumb_funded's picture

it's why i hate the market.  it's basically legal theft and forgive me for stating the obvious but it's left me dumb-funded.  i do love gold, i'm still working on that ounce.  i'm up to 3/4 now.  yeefuckinghawwww

Gold Pedant's picture

I've picked up a few 1/10 oz gold Eagles from JMB. They're not THAT much above spot, and the numismatic value makes up for the difference. Keep in mind the possibility of small-ish transactions. It might be good to have just a little "pocket change" or something to push a potential seller over when you give him the 1 oz Eagle and another little extra something. Just throwing that out there.

buzzsaw99's picture

...we need reasonable clearing prices for our muppet's bank stocks (without messing up the notional value of our own pesonal options). [GS' Cohn]

Bay of Pigs's picture

Sam old shit. Another day on the fraud ridden COMEX...

Whoa Dammit's picture

Goldman must be interested in buying more gold.

True Blue's picture

They want that paper back in their hands before someone makes a physical claim on it and reveals the fraud in the COMEX; what 523:1 or so?

Yen Cross's picture

  The Squid should stick to what they do best. Doing deals for tin pot dictators and banana republics.

DogeCoin's picture

Goldman clients are masochists.

semperfi's picture

and don't think for themselves

Bryan's picture

Wait, GS still has clients?

ThroxxOfVron's picture

<--- Release the Kraken!!!

<--- Didn't we have 3 goldfish?

Seasmoke's picture

What has Gold done since Mr. Yellens rate hike. Gone up $150+


Yet we are being told by Mr. Blankfiend to short Gold becuase of future rate hikes. 


If this is doing God's work. It sure seems like someone is lying about God. 

xrxs's picture

Hike again, and watch everything delever.  Gold goes up.  Drop rates, and we're on the path to NIRP.  Gold goes up.

DirkDiggler11's picture

Kermit awakens the next morning to find that the GS Vampire Squid had surgically removed his testicles and left him at a bus stop. Testicles are like Gold these days to the Vampire Squid GS ....

Bemused Observer's picture

That story makes no sense...testicles aren't the kind of organs stolen. They take kidneys and such, even eyes, as there is a market for them. But there is no market for testicles, I'm not sure they can even be transplanted in a functional way. And cosmetic surgery on the scrotum does not involve the transplanting of actual testicles, any more than breast enhancement involves transplanting mammary glands.


He's a married man. Which leads me to believe he got himself involved in something that he now has to explain to his wife. Perhaps she wanted children and he didn't. But I find it difficult to believe the stated story.

waterwitch's picture

If you want to sound like Kermit there is.