Goldman: "Stay Long Gold"

Tyler Durden's picture

For what it's worth, Goldman likes gold. "Consumers: We expect gold prices to continue to climb in 2011 given the current low level of US real interest rates. Further, with our US economics team now forecasting slower US economic growth in 2011 and 2012, we expect US real interest rates to remain lower for longer, supporting higher gold prices through 2012. Consequently, we recommend near-dated consumer hedges in gold through 2012. Producers: With gold prices expected to continue to climb through 2012, we find hedging opportunities less attractive for gold producers at this time." In other news, Goldman also likes Silver, Copper, Zinc, WTI and Brent. In other words: QE3 is coming.

Details on Gold...

Trading recommendations

Rolling long Gold: Buy December 2012 COMEX Gold (initial value of $1,800.5/toz, current gain $423.9/toz)

We expect gold prices to continue to climb in 2011 and 2012 given the current low level of US real interest rates, and as a result recommend a long gold position. With expiration approaching, we are rolling our outstanding long Dec-11 COMEX gold trade recommendation, entered on October 11, 2010 with an initial value of $1,364.2/toz and a current gain of $423.9/toz, into a long Dec-12 COMEX gold future position with a reference price of $1,800.5/toz.

and Silver

Over the long run, silver prices tend to track gold prices. Thus, our silver forecast reflects the historical ratio to gold.

and Copper

Long Copper: Buy June 2012 LME copper (initial price $8,804/mt, current loss $1,153/mt)

Although our long copper position opened in May 2011 remains substantially under water, our 12-mo copper price target of $9,500/mt suggests substantial upside from current depressed levels. We caution that concerns about the European sovereign debt problems and slowing economic growth are likely to continue to overhang the market in the near term. However, we emphasize that EM-led global economic growth, combined with material disappointments in copper production on weather disruptions, labor unrest and declining ore grades, suggest a continued deficit in the copper market in 2012. Further, we maintain that a potentially powerful upside catalyst still largely lies ahead in China should policymakers convincingly shift to an easier stance and/or should lower prices increasingly entice Chinese buyers back into the market. Thus, we continue to recommend establishing long positions in copper, especially on sentiment-driven short-term dips.

and this being Goldman, of course, Brent and WTI:

Long NYMEX WTI December 2012 contracts (initial price $90.79/bbl. Current gain $5.93/bbl)

We recommend a long position in the NYMEX WTI December 2012 contract, as the clearing of the surplus at Cushing has reduced the risk of breaching the storage capacity at Cushing and we expect the upcoming rail capacity that comes on line in 1H12 to help clear the crude oil surplus in the Midwest, pushing WTI prices closer to Brent prices.

Long ICE Brent July 2012 position (initial price $105.16/bbl, current gain $2.93/bbl including loss on original position of $1.95/bbl).

We have pulled the long position in the ICE Brent December 2012 contract forward. With the timespreads in Brent now moving more with concern over European debt than prompt Brent crude oil prices, the ICE Brent July 2012 position is closer to the tight physical  crude oil markets which we expect will be less affected by flare-ups of concern over European debt, and which we expect will tighten further in 1H12.

full report:

GS 11.14

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DCFusor's picture

Or Qe3 isn't coming.  With Goldman you never know which side of their book they're talking...but it's never neutral.

Hard1's picture

Correct trade for the wrong reasons.  The reason to hold gold is not low interest rates, but the terrible management of debt in USA, Europe, Japan, the monetization that is coming and the confiscation of savings via deterioration of real returns.

Quadlet's picture

<sarc>Don't buy physical.  Just buy futures.  You're safe there... </sarc>

WonderDawg's picture

I think we all know the drill. Fade the Goldman call...

gmrpeabody's picture

I can only assume this means I should sell!?

gmrpeabody's picture

Perhaps they're pushing the GLD.

To what end I do not know.

Thomas's picture

That is an excellent notion.

gmrpeabody's picture

Perhaps they(and some close friends) would like to lighten up on the GLD at this time, to reposition(quietly) into physical or one of the closed end and allocated funds.

Fedophile's picture

But GLD is physical.

Either way deflation is coming before the printing.

Smiddywesson's picture

Methinks something wicked this way comes.


ViewfromUndertheBridge's picture

By the pricking of my thumbs,

something wicked this way comes. Bill S. Macbeth.


Sokhmate's picture

Who'th Macbes?

I wathn't refering to anysing. Mithter.

FranSix's picture

Negative real interest rates have been in vogue since yr. 2002.  So has the rising price trend in gold.

The Big Ching-aso's picture



Aye.    They never give out 'free advice' to anyone including their mothers.     Then again Christmas is approaching.

LongBalls's picture

Get ready for another run up in gold in prep. for the smack down. The last time Goldman was this bullish gold went from $1,650 to $1,900 then back down to $1,600. This will be no different. Except maybe the entrance and exit points. Buy and hold the physical. Play the paper GLD if you have the stomach and expertise. But for GOD's sake pull profits and add to your phyz. Anything other than this and you are dancing with the devil.

bigdumbnugly's picture

being long gold that's about the last thing i wanted to hear.

DosZap's picture
  • Goldman Tells Clients To Buy COMEX Gold At $1,364.2, Raises 12 Month Gold Forecast From $1,365 To $1,650, Silver To $27.60
  • Tell me where to get both at these prices, be happy to take someoff your hands.

    Until the EU folds like a book, these pries will not return.

    goldfreak's picture

    was this advice for customers they screw a lot or for customers they only screw a little?

    High Plains Drifter's picture

    that is no lie,  when the squid starts talking nice about the noble metal, i don't like it for sure. 

    fuu's picture

    Shit, anyone want to buy some gold?

    kito's picture

    Goldman shorting au as we speak

    EL INDIO's picture

    In case someone is interested I speculated on Friday about a possible gold smash down scenario.

    You can find it on ZH here:

    High Plains Drifter's picture

    what about 2008? gold was down for the year during that time , correct?   

    High Plains Drifter's picture

    it sure didn't have that positive feeling........

    EL INDIO's picture

    Yes Gold recovered by the end of the year, but the take down occurred many months earlier.

    Anyway, I do think that scenario is not very likely to happen (although not impossible) but if I was one of the evil masters that’s what I’d do.

    ParkAveFlasher's picture

    I'm no trader, nor a paid "investor" of OPM, nor a gambler, nor a millionaire nor someone who pretends to be any of those.  I'm a 9-5 stiff with a family.  And a mortgage.  And a 401k that I can't seem to square myself with relying on.  I read ZH because of, well same reasons you all do, most of you.  ZH is a yippitdy little Toto tugging at the curtain of the "Wizard", I mean that as a compliment.  As the last five years of swelling prices and salaries that don't swell at the same rate sunk in I started buying PM in June with any bit of cash I could beg, borrow, or steal.  I started hunting around for insights and info on the price, the value, the market.  I came across Jim Sinclair, GATA, Turk, all the biggies and then I came across ZH, which I now read religiously.

    El Indio, I for one have been reading your posts and I don't consider them contrarian, first off, in fact, from what I've seen there are moves in price of gold of 10-20% with regularity so I agree that the expectation of smackdown comes with the expectation of further upward climb.  I haven't been watching long enough to sense the cyclical moves to back up my sense of regularity in the price movement.  I do see that there are big players making their own moves,  there is the opacity of the paper market (I don't have a degree in finance I can't fathom how you can trade something that you don't own and effect that price of something you don't own), the CME who drops margin hikes like they were pile drivers on the price of gold ... and the fact that many gold biggies seem to remind traders that the market is "violent" and "chops".  So I'm not going to down arrow your comments - in fact I am a PM bug, officially, in reality, a holder of physical and with a sense that caution with one's wealth is most important right now, especially if you do not have "wealth" to spare.

    EL INDIO's picture

    Hi ParkAveFlasher,

    You are right to be cautious and you are right to take anyone’s views with pinch of salt. Nobody knows the future. I’m a PM investor too and I’m not selling anything even if we get a huge dip. I only try to time my buying to get a better average price. Buying regularly is a good strategy, buying the big dips only is even better and that’s what I try to do. Regarding my views, I try to anticipate the worst and be prepared for it, but I only act on facts.

    I share my views to get feedback from you guys so thanks for your comment.

    pandabear01's picture

    EL INDIO, Ditto on that.   My strategy exactly.  It has kept me ahead for the last 19 years!

    Smiddywesson's picture

    What I'm seeing PAV, is diminishing returns on the smack downs.  We are going to see more of them, but there's a limit to what they can accomplish.  During the last one, they drove gold down to sub $1600 levels, but that overnight spike down to $1534 bounced right back above the $1600 level.  My guess is they came close to decoupling paper gold with physical.  A number of gold vendors experienced technical problems with their web sites at that time, and I bet it wasn't a coincidence. 

    So what I'm saying is we are likely to see more of the same, and this call by Goldman heralds its coming.  More of the same:  A big drop in prices combined with multiple margin hikes, a spike down overnight, and a bounce right back up to a range that will stay in place for weeks. 

    This is all about stalling for time so that they can prepare adequate gold reserves at the central banks (and get rid of any and all tungsten).  China is the least prepared, having more foreign currency reserves on its balance sheet than gold.  Therefore, we are seeing all the bargain gold being traded during their session, not ours.  This isn't a coincidence, because if you are trying to set up a viable monetary system based on gold, all the principal players have to be ready before you can make your move.

    ParkAveFlasher's picture

    Thanks EI and SW.  This is a high-value site.  In reading, I feel like a pilot fish drafting alongside the shark but in commenting I take a bite for myself.

    The Big Ching-aso's picture



    Ya know, if I were Goldman I'd start headfaking those who think they always know what they're going to do next.      For instance in this case, they could say Gold's gonna go up a lot and actually be saying exactly how it's gonna roll out.      Then when it does and most went short because they thought Goldman was too, margin calls baby, margin calls - that plus one hell of a strategy to keep everyone off balance.

    PaperBear's picture

    Presumaby silver too.

    GeneMarchbanks's picture

    Now that they have control over the ECB printing press I wouldn't doubt this call...

    Lmo Mutton's picture

    After you go long expect a slam to stop you out.

    Just the standard MO.

    Smiddywesson's picture

    Yes, just before a big move the first mouse gets killed.  First the shake out, then the second mouse gets the cheese.

    lairdwd's picture

    I'm out for the short term deflation mode. This just confirms my sentiment.

    Bansters-in-my- feces's picture

    Can't...stop.... the.....urge.....

    FUCK YOU'S Goldman Sachs.

    I'm a gold bug all the way...(PHYSICAL)

    But when the Sach says go long,you know some naked shorting is comming up in a big way,


    In case I forgot to say it....

    FUCK YOU'S Goldman Sachs,&JP Morgan.

    Global Hunter's picture

    Probably means no QE3 near term so expect a big deflationary crash to hit equities and commodities very soon, they're shorting into the crash/deflationary event.  When they tell clients to go short that's when QE3 is near term, in my humble opinion.

    DosZap's picture

    Nope their at least as smart as we are, and they know wht we know.

    The Euro is going down, and the dollar will be the GO TO unsafe haven of fools yet again, and the metals will drop 20-25%+.

    Safe refuge, my ass.


    SheepDog-One's picture

    For the amount of printing already done, I believe gold is pretty safe around here. Gold hasnt priced in anything, not by my view anyway and is likely underpriced no matter if theres no future printing, that in itself wont cause gold to drop.

    Global Hunter's picture

    If I have excess cash at the end of the week I will buy physical, beside land its the only thing I can guarantee will have some value in 2012 and beyond 

    DoChenRollingBearing's picture

    ^---  + 1 and yes to all you guys above.

    That is my strategy as well.  I buy gold when I have extra money, the price does not matter.  Goldman's call I ignore, but it may be a short-term bearish indicator.  Remember, GS makes NO MONEY if their customers go out and buy gold...

    J 457's picture

    In this political environment, there can be no QE3 with the S&P at 1,260 range and WTI at $99.  If some EU nations default, which most all concede that will happen, the USD will surge.  Then US will have opportunity to further QE as commodity prices relax.  Long-term gold/silver/oil UP.  Near-term 0-3 months, they will drop 15-25%.  The Santa rally will not happen and Jan will be a down month as well. 

    Smiddywesson's picture

    The Euro is going down, and the dollar will be the GO TO unsafe haven of fools yet again, and the metals will drop 20-25%+.

    Safe refuge, my ass.

    If I were a central banksta, that's when I would use multiple margin hikes and assault gold prices.  Keep your powder dry, buying opportunities are on the horizon.

    Raynja's picture

    The central banks won't do anything until the markets beg for help. They have to be invited thru the door before they can consume you.

    tmosley's picture

    COMEX gold to zero, then.

    I've been saying that for a while.

    Physical only, guys.  When all this paper crap collapses, it will force a shift of purchasing power from those who own paper to those who own physical gold and silver.  It's like having two balloons connected by a sealed valve.  One is full, the other empty.  when the valve is opened, the air moves from one side to the other, bringing the air pressure/price to equilibrium.  Even better, the first balloon is under a pneumatic press, and will force ALL of the air into the other side.  This will happen with the gold and silver markets at the very least, and may happen with many more markets as gold and silver return to their role as currency, snatching back that power from an overinflated paper economy.

    bob_dabolina's picture

    Did you hear about Celente? 

    Comay Mierda's picture

    feel bad for the guy, he is one of many that lost money with the MFGlobal collapse. I hope he's buying phys now