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. . . .
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.