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Goldman Sachs Buys Gold; Tells Public to Sell

Written by Gary North on September 2, 2013

Gold declined sharply in early April. That’s when Goldman Sachs issued a “sell” signal

Then Goldman began quietly to buy shares of GLD, the ETF for gold. It now owns 3.7 million shares. (Click the link.)

On April 23, Bloomberg published this report. It told of Goldman’s official public recommendation: “Sell!”

Goldman Sachs Group Inc. cut its “near-term” outlook for commodities and reduced forecasts for oil and coffee amid prospects for weak demand from China to Europe. The bank also exited a bet on lower gold prices.

Goldman Sachs lowered its three- and 12-month return forecasts for the Standard & Poor’s GSCI gauge of 24 commodities to 2.5 percent, from 6 percent in three months and 3 percent in 12 months, and cut its near-term outlook on commodities to neutral from overweight, according to the report, dated today. It exited its bet on lower gold prices, with a potential gain of 10 percent, while saying bullion may fall even more. . . .

Sell Gold

Goldman Sachs issued a sell recommendation on gold on April 10, before the precious metal plunged 13 percent in the two sessions through April 15, the biggest drop in three decades. Today gold futures traded at $1,410.70 an ounce on the Comex in New York, up 6.7 percent from a 14-month low set on April 16. The bank said today gold may trade at $1,530 in three months, $1,490 in six months and $1,390 in 12 months.

Goldman Sachs said it closed its bearish recommendation on gold as prices moved above $1,400 and were “significantly below” its target at $1,450. Holdings (.GLDTONS) in exchange-traded products backed by gold dropped 11 percent this year to 2,330.5 metric tons, according to data compiled by Bloomberg. Assets in the SPDR Gold Trust, the biggest gold exchange-traded fund, are the lowest since 2010.

“The move since initiation was surprisingly rapid, likely exacerbated by the break of well-flagged technical support levels,” Goldman Sachs said. “Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane as well as our economists’ forecast for a re-acceleration in U.S. growth later this year.”

It looked like a great call. The rubes who believed the report shorted gold. They made money. Briefly. Gold continued downward, bottoming at $1192 in on June 28.


Meanwhile, Goldman was buying gold all the way down.

Now gold is around $1400, and Goldman is sitting on a pile of shares of GLD, bought at rock-bottom prices.

Watch what they do, not what they say.

Continue Reading on www.zerohedge.com

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14 thoughts on “Goldman Sachs Buys Gold; Tells Public to Sell

  1. Why does anybody listen to anything Goldman says…..they are scum liars who would sell out their own mother!!! When will we all wake up to the real intent these wall st whores!!!! My God any small investor that would still involve themselves in this Ponzi scheme deserves to lose!!!

  2. Goldman-Sachs was paid a huge fee by the state of California to sell California bonds, then turned around and bet against them using derivatives. When California went into the toilet financially, Goldman made a fortune. The reason AIG went out of business is, Goldman was using them to buy all its insurance on all the mortgage-backed securities and the California bonds. When the bubbles eventually burst, the money got sucked out of AIG and the taxpayers (in the form of bailouts), and Goldman became filthy, filthy rich.

    All this happened after the repeal of Glass-Steagall in '99. Money is an addiction with these people and they will keep spinning the wheel until the whole country hits gamblers ruin.

  3. Yep, just like the -phony pResident, don't listen to what they say as they are liars. Watch what they do.

  4. Haven't they always been thieves? Selling out the people is nothing new to them; they've done it so long it's become their notion of what the natural order of things is all about.

  5. oldenufftoknowbetter says:

    Volatility creates opportunity in Politics and in markets. Most people yearn for stability.That is why politicians and bankers have power and get rich. They pray on others who are scared, too lazy, too apathetic or too greedy. Like lawyers, they too are just friction in the system. They create nothing.

  6. That's exactly what you can expect from Goldman Sachs. After all, it is a member of the political and financial establishment. Why would anyone believe anything its members say. The name of the game is to fleece the people for the benefit of the elite. Ownership of gold and silver preserves wealth in the long-term. Paper promises have no substance.

  7. "All this happened after the repeal of Glass-Steagall in '99."

    Which had nothing to do with the financial crisis. It is just something journalists who don't understand economics and finance cite as a way of assigning blame in a 30 second sound bite. Before that law was repealed, it was easy to get an exemption from the law by the same big firms who had to be bailed out when the crisis hit.

  8. "Goldman Sachs issued a sell recommendation on gold on April 10, before the precious metal plunged 13 percent in the two sessions through April 15, the biggest drop in three decades."

  9. "Goldman Sachs issued a sell recommendation on gold on April 10, before the precious metal plunged 13 percent in the two sessions through April 15, the biggest drop in three decades."

    Was this a self-fulling suggestion: Goldman Sachs says sell, people sell, and the price drops because supply exceeds demand? (first try dropped my comment)

  10. If you read Stewart Thomson you'll get advice to do exactly what GS is doing. I'm sure Stewart was buying all the way down too. You can google him or get some of his stuff at 321gold.com

  11. You make assertions and provide no proof. Journalists? I think you're in the wrong medium.

    After the last depression, Congress enacted Glass-Steagall, which forbid banks, insurance companies, and investment houses being in the same institution, to deter reckless speculation with depositors’ money, which was seen as a major contributor to the stock market instability of the time.

    In 1999, at the height of the “Deregulation” craze, Citigroup and Travelers merged, a clear violation of Glass-Steagall. But rather than enforce the law, Congress repealed the prohibitions of Glass-Steagall with the passage of the 1999 Financial Services Act. As one sponsor of the new law, John McCain said US financial markets had "matured" since the Great Depression and so Glass-Steagall was no longer necessary.

    That opened the floodgates for runaway financial speculation. Wall Street knew that if they made money they would be allowed to keep it, but if their investments lost money, the US Government would step in to transfer the losses to the American people, because that is what had been demonstrated during the S&L debacle of the 1980s.

    Starting about in 2005, Wall Street started bundling mortgages together into investment bundles. The initial offerings were greeted with great success, and soon everybody wanted to get in this new “product.” So great was the demand for Mortgage-backed Securities (MBS, also called Collateralized Debt Obligations) that Wall Street started running out of mortgages to front-load the system. This led to the creation of the “sub-prime” mortgage; granting mortgages to people who normally would not qualify. Congress, themselves invested in the Wall Street firms that were profiting from selling MBS, passed an $8000 first-time homebuyer tax credit (actually a loan repaid in future taxes) to lure more buyers in which helped front-load the process even faster.

    This sudden surge in new homebuyers increased demand and home prices skyrocketed! This made investors and homebuyers even more confident, demand for homes and MBS soared even higher and a genuine bubble was being formed.

    Demand for MBS was so great that as the supply of available mortgages began to dwindle, brokers started taking 'shortcuts'. Bear Sterns was pledging the same mortgages into multiple investment bundles; a clear case of fraud. Other brokers were blending mortgages into the bundles that were already in foreclosure. As the returns from the MBS failed to materialize evidence surfaced that the earlier earnings had not been genuine, but were “ponzi” payoffs, using money collected from new investors to send dividends to older investors.

    The whole scan started to unravel in 2008 and here is where things took a dark turn. Because Congress had their own fortunes invested in the companies at the heart of the fraud, Congress decided to prop up the scam with taxpayer money and block any efforts to investigate or prosecute. That is why TARP was passed by the Congress despite 90% popular opposition. Congress was saving itself at the taxpayers' expense. The phrase “toxic asset” was DC-speak for the fraudulent mortgages backed securities, which were being repurchased in order to avoid investors seeking to jail the Wall Street criminals, which would have brought all of Wall Street down. Despite claims that the US taxpayer would be refunded when the “Toxic Assets” were resold at some point in the future, the reality is that none of those assets will ever see a penny of repayment, because they are all the product of the biggest financial swindle in history.

    But the Davids of this world are immune to anything except the melody of their own 15-second soundbites.

  12. Texas Chris says:

    Dr. North, I owe you lunch.

  13. Texas Chris says:

    At least…

  14. Can you spell "manipulation?" G O L D M A N S A C H S