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Short gold in '08, Goldman says

ANGELA BARNES

Globe and Mail Update

Latest comment posted at 11:57 AM EST 02/12/07

Bullion has scope to drop to $600-$650 an ounce level by next summer, investment team says ...Read the full article

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  1. bill wilson from Taiwan writes: interest rates and thereby lowers the risk of a recession, and the U.S. trade balance improves further.

    And these guys get paid big bucks for this advice?

    If the Fed drops interest rates, it will still not solve the housing crisis this time and it will not stop the US from experiencing a recession. In addition a drop in rates will cause the dollar to be even less attractive than it already is.

    Now if somehow the US does avoid a recession then it is very unlikely that the trade deficit will improve much as imports will remain high, oil included.

    The only way out for the US from its current economic "Catch-22" is to actually have a recession and allow this to squeeze out the speculative excesses of the last several years. But that would hurt Wall Street and we can't have that, can we? That's why we get this blabbering garbage passed off as analysis.
  2. Chris Henry from Canada writes: I agree Bill. However, I think that there is one major flaw to their argument that either these analysts fail to understand, or most likely remain intentionally ignorant on. The interest rate is not going to solve their problems, the major banks, including Goldman, will be shown to be insolvent once they fully-write down their subprime assets to market value. Once that happens, the US will face a financial crisis unprecedented in their history. America has no savings, and the only thing that has been keeping the nation afloat was foreigners willingness to buy their debt. Check mate. Lowering interest rates will not be possible, in order for America to borrow money from abroad, the interest rates on US treasuries will have to climb. Decades of low interest rates and money pumping by the Fed fuelled this boom in credit, and the bubble will surely burst, if not now, within the next 2 years.

    The whole system needs to be scrapped. Fiat currency always ends in poverty.
  3. Terry Quinn from Canada writes: The other issue in the US economy is that the credit crisis has yet to peak and the poster above has it right. Arecession or pretty darn close to one is needed to "clean out the barn". The US politicians may hope to delay an economic correction until after next November's election but that's not necessarily in their control.
  4. Chris Henry from Canada writes: I agree Bill. However, I think that there is one major flaw to their argument that either these analysts fail to understand, or most likely remain intentionally ignorant on. The interest rate is not going to solve their problems, the major banks, including Goldman, will be shown to be insolvent once they fully-write down their subprime assets to market value. Once that happens, the US will face a financial crisis unprecedented in their history. America has no savings, and the only thing that has been keeping the nation afloat was foreigners willingness to buy their debt. Check mate. Lowering interest rates will not be possible, in order for America to borrow money from abroad, the interest rates on US treasuries will have to climb. Decades of low interest rates and money pumping by the Fed fuelled this boom in credit, and the bubble will surely burst, if not now, within the next 2 years.

    The whole system needs to be scrapped. Fiat currency always ends in poverty.
  5. Pete Scott from vancouver, Canada writes: Goldman is a Market manipulator. Inflation is running rampid and the US dollar is in the tank. Gold will most likely go through $1000 per once by 2009. I my opinion Goldman is in cohoots with the US Govt. Remember when they MAGICALLY revalued their commodity index and caused the market to sell off with what many people think was blatent manipulation?! Don't let Goldman fool you. The US Govt is very afraid of the gold price going higher insofar they will be found out re the real rate of inflation and the continued devaluation of the US Dollar. Only propaganda meant to change investor sentiment. China and India, Japan and Russia are all buying gold. Commodoties guru Jim Rogers, John Embry of Sprott Asset Mgt. Pierre Lasonde ex CEO Newmont mining, Richard Russell (dow theory letters) would all viamently disagree. Look up GATA (Gold Antitrust Action Committee) you can find all the support you need that will inform you of the truth in regards to the gold price. Run a chart of the DOW against a chart of GOLD. One share of the dow buys approx 17 ounces of gold. 20 years ago one share of the DOW bought over 40 ounces of Gold. That means the DOW is down 58% against the Gold price. We are in a USA recession now. Housing auto and financial sectors are also in the tank. The muppet cheerleaders in the media report otherwise.
  6. Pete Scott from vancouver, Canada writes: Goldman is a Market manipulator. Inflation is running rampid and the US dollar is in the tank. Gold will most likely go through $1000 per once by 2009. I my opinion Goldman is in cohoots with the US Govt. Remember when they MAGICALLY revalued their commodity index and caused the market to sell off with what many people think was blatent manipulation?! Don't let Goldman fool you. The US Govt is very afraid of the gold price going higher insofar they will be found out re the real rate of inflation and the continued devaluation of the US Dollar. Only propaganda meant to change investor sentiment. China and India, Japan and Russia are all buying gold. Commodoties guru Jim Rogers, John Embry of Sprott Asset Mgt. Pierre Lasonde ex CEO Newmont mining, Richard Russell (dow theory letters) would all viamently disagree. Look up GATA (Gold Antitrust Action Committee) you can find all the support you need that will inform you of the truth in regards to the gold price. Run a chart of the DOW against a chart of GOLD. One share of the dow buys approx 17 ounces of gold. 20 years ago one share of the DOW bought over 40 ounces of Gold. That means the DOW is down 58% against the Gold price. We are in a USA recession now. Housing auto and financial sectors are also in the tank. The muppet cheerleaders in the media report otherwise.
  7. Terry Quinn from Canada writes: The other issue in the US economy is that the credit crisis has yet to peak and the poster above has it right. Arecession or pretty darn close to one is needed to "clean out the barn". The US politicians may hope to delay an economic correction until after next November's election but that's not necessarily in their control.
  8. Pete Scott from vancouver, Canada writes: Goldman is a Market manipulator. Inflation is running rampid and the US dollar is in the tank. Gold will most likely go through $1000 per once by 2009. I my opinion Goldman is in cohoots with the US Govt. Remember when they MAGICALLY revalued their commodity index and caused the market to sell off with what many people think was blatent manipulation?! Don't let Goldman fool you. The US Govt is very afraid of the gold price going higher insofar they will be found out re the real rate of inflation and the continued devaluation of the US Dollar. Only propaganda meant to change investor sentiment. China and India, Japan and Russia are all buying gold. Commodoties guru Jim Rogers, John Embry of Sprott Asset Mgt. Pierre Lasonde ex CEO Newmont mining, Richard Russell (dow theory letters) would all viamently disagree. Look up GATA (Gold Antitrust Action Committee) you can find all the support you need that will inform you of the truth in regards to the gold price. Run a chart of the DOW against a chart of GOLD. One share of the dow buys approx 17 ounces of gold. 20 years ago one share of the DOW bought over 40 ounces of Gold. That means the DOW is down 58% against the Gold price. We are in a USA recession now. Housing auto and financial sectors are also in the tank. The muppet cheerleaders in the media report otherwise.
  9. Pete Scott from vancouver, Canada writes: Goldman is a Market manipulator. Inflation is running rampid and the US dollar is in the tank. Gold will most likely go through $1000 per once by 2009. I my opinion Goldman is in cohoots with the US Govt. Remember when they MAGICALLY revalued their commodity index and caused the market to sell off with what many people think was blatent manipulation?! Don't let Goldman fool you. The US Govt is very afraid of the gold price going higher insofar they will be found out re the real rate of inflation and the continued devaluation of the US Dollar. Only propaganda meant to change investor sentiment. China and India, Japan and Russia are all buying gold. Commodoties guru Jim Rogers, John Embry of Sprott Asset Mgt. Pierre Lasonde ex CEO Newmont mining, Richard Russell (dow theory letters) would all viamently disagree. Look up GATA (Gold Antitrust Action Committee) you can find all the support you need that will inform you of the truth in regards to the gold price. Run a chart of the DOW against a chart of GOLD. One share of the dow buys approx 17 ounces of gold. 20 years ago one share of the DOW bought over 40 ounces of Gold. That means the DOW is down 58% against the Gold price. We are in a USA recession now. Housing auto and financial sectors are also in the tank. The muppet cheerleaders in the media report otherwise.
  10. Bryan Santo from Rancho Cucumonga, United States writes: If Gold drops below $600 It will be a sad day for the US dollar. You might be able to continue to munipulate the Gold price for about 10-15 more years but its becomming obvious that foreign countries outside the mainstream US Dollar Indexed countries are taking their US dollar reserves and investing them in hard assists such as Gold. 6000 years of history on the importance of Gold will only shortly be won maybe for the next 25 years MAX. The central banks supplies are running out and they are going to have to print new money at a huge rate to keep up with liquidy problems because the super rich want their money and the only way the middle class will be able to give back their true loan amount is for the govt to print more money and bale them out. Inflation is soring world wide and in another 10-20 years we will experience it once oil is no longer pegged to the us dollar and especially when they go to another currency and no longer use the (basket) which I believe is a farse because is very heavily US dollar weighted. How can the fact of so much liquidy needed be over looked.The middle class consumer borrowed far more than the houses are actually worth and in small words legally stole the difference,in fact many things were over looked when aprasiers valued the houses some would have never even passed an inspection and are worth only the land value but they were approved for 90-100% of the apraised value. Common sense will tell you that it will take a devalue of US currency to truely value a 95% loan since I know personally that the house is worth 60-75% of the owed money. If the US dollar losses purchase power but is hidden because of world wide inflation and purchasing power losses eventually from the euro therorectically Gold would never cross below $700 again in the long term unless serious deflation occurs world wide and if this happens Gold will tripple once that period ends. But the fed is determined to mute the Gold price as long as possible.
  11. Ramesh Fernando from Canada writes: Goldman Sachs is living in techicolor. The financial mess going through the market will collapse as staglfation starts up. There's going to be a long recession in the USA, and expect the US dollar to fall further. It's an overvalued currency which still has a way to go before it wil stabalize. The extra liquidity will not affect the USA business investment climate. Consumers will max out eventually, and it's going to be major disaster with the easy money policy of the lunatic Fed because it will recession and inflation. Once that stops in the long term, inflation will go down to deflation and liquidity trap. Central banker's worst nightmare. Just ask the Bank of Japan.
  12. w sykora from Kingston, Canada writes: Some pretty smart guys posting here and I don't trust Goldman Sachs one bit after their market manipulation in the last four years.

    However, the explosive rally in gold and oil has not been matched by shares in the exploration, mining, and extraction companies. I think the market is telling us something.

    Today Bloomberg reported that "The dollar rose as expectations for another interest-rate cut this year eased. Interest-rate futures showed a 68 percent chance the Federal Reserve will lower the overnight lending rate to 4.25 percent by Dec. 11, compared with a 94 percent chance yesterday."

    And, "Gold may be too costly for jewelers, the biggest buyers of the metal, some analysts said. Jewelers accounted for about 67 percent of purchases last year, according to the producer-funded World Gold Council."

    "We continue to consider gold expensive at $800 an ounce,'' said John Reade, an analyst for UBS AG in London. "We continue to look for an opportunity to get tactically long of gold again, but need to see speculative positioning reduced and jewelry demand return.''
  13. Sivaram Velauthapillai from Toronto, Canada writes: Bill Wilson, you may watch to check the recent US trade deficit numbers. You will note that it has been shrinking. US exports are growing much faster than imports, and that's without the full weak dollar of the recent quarter.

    For all of you that live in the inflationary world and think interest rates will be much higher in the near term, how do you explain the fact that long bond yields--which are set by the market and not by any central bank--have trended down lately?

    The thing that everyone--goldbug or not--seems to be missing is that debt blowups are generally deflationary. Nearly all assets are going to be trending down--including gold!
  14. jeremy price from vancouver, Canada writes: who is goldman sachs trying to fool with this soothsaying? these folks are in serious trouble and are threatened by a further increase in the price of gold... the global currency debasement game makes gold bullion one of the few safe asset classes to own and the trend in the gold price since 2001 speaks for itself. Gold has outperformed most of the worlds paper currencies since 2001 and should continue to do so as central banks continue to inflate the money supply willy nilly without due regard for the hyperinflationary consequenses. Jim Sinclair is right, Goldman Sachs is wrong on this call...my opinions only..
  15. David Reigel from Pickering Ont., writes: Let us remember that former head of Goldman Sachs - Henry Paulson ( Sec of the Treasury) has been delivering strong US $ policy statements at every opportuntity. Coincidence, I think not. Unfortunately, the US economy continues to weaken with no signs of a turn around. The Fed has choosen the economy over the dollar - both cannot be saved. The economic data continues to roll in, indicating the Fed has no choice but to continue to cut rates. As we have clearly seen the recent 75 basis point reductions have taken the Us $ to 75.5 on the Us $ index - It has never been lower!!!! Further rate cuts will only put further pressure on the US $ to trend lower. It is a well know fact that the price of Gold and the US $ move inversely 80 % of the time. Gold is a finite resource and world current production is flat. If if weren't for central bank selling we would have had an annual deficit in the supply of gold for over a decade. Unless the Central banks have an infinite supply we are not aware of they can not continue to sell indefinitely. What happens when the central bank sales cease entirely??? GOT GOLD!!!
  16. roscoe schmeille from Canada writes: I wonder what Goldman Sachs's short exposure is? The inside word on the Comex is a desperate battle to lower the price of gold before the smart money like GS bleeds to death on exposed shorts.

    Desperate indeed. Goldman Sachs lucked out feeding this drivel to the Globe and Mail - don't newspapers usually charge for advertising?
  17. Bruce Batchelor from Canada writes: When is the mainstream press going to give up the stupid moniker of "gold bug." EVERYTHING the gold bugs have predicted has come true. And it will continue. Some of us are rolling in the profits. We are just citizens who made a good choice. Calling the holders of gold "bugs" is like calling airlines fly bugs, as if controlled flight remained the dream of a few nuts in foil hats! Incidentally, there is a lot of smart commentary in this thread. Now what I want is a derogatory word for those who continue to believe against all the evidence that paper money has some real value.
  18. Steve Hickey from Australia writes: Go short gold in 2008? sorry i have never heard such an un-educated statement for a long time. With the dollar at all time record lows against a basket full of currencies and the likelihood that the fed will cut interest rates even further on the 11th how can they say that we should short gold.
    I am long bullion and gold stocks. I expect gold to be at $1500 and silver at $30 by then end of next year.
    The Fed will continue to lower interest rates next year and that will only push gold and silver prices up as they are the best hedge against inflation bar none.
  19. Petre Basaram from Bubbleville, Alberta, Canada writes: Pretty smart comments, everyone has a point. In order to save the US economy, they also have to "kill" the OIL speculators (with them go the gold ones too) and make the markets regain the confidence in the USD, at least for a while. Every time there is a run that seems to get out of control, they do something (see June '06 for gold, fall through winter '06 for oil) and I'm afraid that this jawboning is a preview to a nasty surprize to those that bet on a rate cut in December. It's all a part of the smoke and mirrors game played by the US, Japan and other financial entities. They need to reverse the money flow and have the foreigners reinvest in US (a weak dollar won't do). Most central banks stated they don't want rapid changes in the forex with the associated big moves in the commodities.
  20. Mark Tabaracci from Toronto, Canada writes: Goldman Sach's latest recommendation is probably the first clue the “Gold Cartel” are "Officially" covering. No doubt Goldman Sachs will be quietly buying all of that gold that the unwitting sheep drop on their laps. With the entire U.S. economy falling off a cliff (not just in steep decline), outflows increasing, and further interest rate cuts looming, there is almost no chance that the U.S. Dollar will stabilize for anything more than a very short period. The only chance that the U.S. Dollar will stabilize with conviction is if other central banks debase their currencies at a greater rate, and should this happen; gold's rise will accelerate even faster. Is there anyone with one shred of sanity invested LONG TERM in the greenback??????
  21. Josh Fielden from Kilifi, Kenya writes: Since I can't say anything libellous on this site against any entity or against any reporter, lets put it this way...... GS is one of the worlds most "honest" entities. It has had the good fortune to have inside information from the Fed for years.....enabling it to go short whenever the Central Banks (CBs) are about to dump (sorry sell) gold on the world market. You know, the dollar.pound, euro etc are really needed. Who needs gold anyway ? All it does is make CB paper look bad !! Look and see ex GS personnel everywhere "honoring" the financial markets, the US Treasury and the world's Central Banks with their presence and occupying crucial positions of trust (of which they are totally worthy) The problem now for poor GS is that their short position in Gold is "game over". The CBs can't (because they are running out) or won't go on, selling into a bull market : and there is huge buying going on by those blasted Russians, Indians, Turks, Arabs and Chinese etc. Dumping doesn't work any longer: the gold just gets gobbled up by the market. The US's biggest export last quarter was gold ! Additionally, the Gold/Oil ratio which should be 15:1 is now only 8:1 which means GOLD IS INCREDIBLY CHEAP due to long term "legitimate" price suppression by GS and friends. It's a terrible situation and GS just has to unwind its short position as quickly as it can without losing too much money. Fortunately, the young and lovely Angela Barnes (who is still trying hard to learn about markets) has been very helpful, as has Globeandmail.com How wonderful GS can use the media and Angela Barnes and other such reporters to help them get out of a tight spot.
  22. Phil Hubb from United Kingdom writes: Gold is fed by inflationary forces, namely the creation of money. The money that fed the "recovery" of global markets following the asset crash of 2000-2002 was created through excessive speculation in real estate and RE backed derivatives. To fuel this speculation, mortgage backed debt paper was mis-branded AAA and sold to pension funds, hedge funds and banks world wide under the ridiculous assumption that the RE market was invulnerable to a serious correction and that the quality of loans backing the paper was honestly AAA.
    This has all come crashing down and, as a result, the credit market is in tatters. Even reputable, profitable firms are having extreme difficulty securing financing, note the recent spike in LIBOR.
    Long story short, the destruction of the credit market is highly deflationary, and while gold has had a good run as the Fed attempts to print its way out of the mess via rate cuts, discount window lending, extending TOMO maturities etc... these measures have so far failed miserably. This is, as I've said, a highly deflationary event as the credit market is signaling a contraction in available money.
    And in deflationary spirals such as this, cash is king and assets get thrown under a bus. And this includes gold.
    I'm not saying gold will crash, in dollars it may rise all year if the Fed really decides to destroy the USD just to avoid a recession. But denominated in, for the sake of argument, yen (which has nowhere to go but up since the BOJ cannot really loosen much from the current .5%), its price may fall.
    Just another opinion, FWIW.
  23. Bill Shapiro from Canada writes: Just another way of Goldman trying to bring down anything gold... The U.S continues to rack up major budget and trade deficits with no end in sight. The American dollar should not and will not hold World Reserve Status for much longer and rightfully so. Goldman is once again is trying to squeeze the small guy out of the precious metals sector and capitalize on it themselves.
  24. ambrosio rice pudding from Canada writes: How does Goldman not get busted for market manipulation?

    They tripled the open interest in January $700 puts on the Comex this past Monday and then release this report a few days later.
  25. Matt Stiles from Santiago de Chile, Canada writes: The only way gold goes to $600 in '08 is if there is a massive deflationary depression by the end of the year. In which case, gold would be rising in relative value to everything else. I still think that's unlikely. Deflation in the credit markets - yes. Massive instability in the confidence behind paper currencies - yes. Gold going much higher - yes.
  26. K jones from Canada writes: Goldman is probably sitting on a pile of gold short positions and is trying to drive the price down so they can cover, just more manipulation. They in bed with the fed and treasury dept. "You help kill gold, we'll bail you out when all those CDOs go south"

    For those who claim gold is undervalued, look at silver it's even more undervalued, at 56:1 vs it's historical 16:1 . If gold is 1/2 price silver is 1/6th of it's real value. Drop by for silver/gold talk at Canadiansilverbug site.

    This is Goldman giving you a gift, buy while you can.
  27. carter apps from Canada writes: Funny if you read the full details of goldmans top 10 trades they are all over the place, they state don't be too bearish on the us dollar yet they say to buy asian currencies. If the dollar wasn't weak asian currencies would not rise. If the dollar is weak Gold will rise.

    They also suggest going long Rubles, Koruna, the Real, vs the dollar

    Which is it?

    Sounds like they are saying don't be dollar bearish but the dollar will still be weak against all these currencies, but gold won't react to this weakness because you should not be dollar bearish. I think I saw this argument on Star Trek, Kirk used it to fry Norman 1's computer.
  28. Seb Bink from Netherlands writes: Jack Napier wrote: << I think its funny reading all of your comments about how Goldman is "wrong," how gold is going to "$1000" ounce, how they are engaged in some kind of conspiracy with the US Govt (stupid). Wow, I have never seen such senseless ramblings in my life. >> Hmmm Jack, interesting response! Have you ever looked at who is shorting gold at the TOCOM and COMEX? Probably not. There is a lot of information on this topic if you would look for it. If you do, you will see that the record proves that Goldman has been heavily shorting gold throughout the bull market.. The obvious manipulation is for anyone out there to see.. ambrosio rice pudding in one of the earlier comments quoted an example. Jack, I'm actually surprised at the high level of comments here. This topic normally invites a lot more uninformed responses.. General ignorance among the public about gold and how the governments ( and its close allies ) manipulate it, allows bullion banks to make money from the uninformed. If you want to read about this go and look at the "GATA" website for example. This is exactly the way GS and cohorts ARE 'earning' part of their profits, milking the masses by manipulation. Their blatant misuse of the media is shocking in my humble opinion. So here you are: << Goldman is the most profitable investment bank in the world with the best financial minds. They consistently make billions of dollars a quarter while other banks are losing billions, .. >> you were wondering how GS is the most profitable of all investment banks? How about trading the 'inside track'? Being close to policy makers and acting on information early.. << .. and yet many of you seem to think that you are smarter than the Goldman bankers. >> Hmmm, being smart/smarter doesn't feature in the discussion here, independent thinking does .. think about it!
  29. Dan Lucachick from Eugene Oregon, United States writes: What an opportunity. Go out and buy as much gold as you can. Goldman is everything that is wrong with the "free markets" these days. The fact that they even comment on this subject shows you what they fear. Few things in life are going to be as satisfying as the change to screw Goldman. Here it is, you will be grining at this time next year. Anyone that still believes that Goldman is their friend, needs to be culled from the gene pool.
  30. akihiro yakiimo from United States writes: On October 1, John Crudele at the New York Post wrote, "The Securities and Exchange Commission is looking into whether Goldman Sachs cheated on its way to enormous profits - as the rest of the financial industry was suffering a massive downturn."

    Senate Hearing on Stock Exchange Practices, 1932

    Senator Couzens: Did Goldman, Sachs organize the Goldman, Sachs Trading Corporation?

    Mr. Sachs: Yes, sir

    Senator Couzens: And sold its stock to the public?

    Mr. Sachs: Yes, sir

    Senator Couzens: At what price?

    Mr. Sachs: At one hundred and four. The stock was split two for one.

    Senator Couzens: And what is the price of the stock now?

    Mr. Sachs: Approximately one and three quarters.
  31. Jim kalkin from Canada writes: did anyone check out that Canadian silver site mentioned, Is any of this stuff about silver manipulation and shortages true? looks like an easy and relatively safe trade, better than banks that could go bankrupt.

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