Goldman Sachs shorting gold.....Citi panning gold too!
bidask
Posts: 14,017 ✭✭✭✭✭
April 10th call from Goldman:
Despite resurgence in Euro area risk aversion and disappointing US economic data,
gold prices are unchanged over the past month, highlighting how conviction in
holding gold is quickly waning. With our economists expecting few ramifications
from Cyprus and that the recent US slowdown will not derail the faster recovery they
forecast in 2H13, we believe a sharp rebound in gold prices is unlikely. Given gold’s
recent lackluster price action and our economists’ expectation for higher US real
rates, we are lowering our USD-denominated gold price forecast once again. This
revision further increases our conviction that the turn in the gold cycle is
materializing and our new forecast is further below the forward curve with year-end
targets of $1,450/toz in 2013 and $1,270/toz in 2014. As a result, we recommend
closing the long COMEX gold position that we first initiated on October 11, 2010 for a
potential gain of $219/toz, with the risk reversal overlay expired on March 25. While
there are risks for modest near-term upside to gold prices should US growth continue
to slow down, we see risks to current prices as increasingly skewed to the downside
as we move through 2013. In fact, should our expectation for lower gold prices
continue to prove correct, the fall in prices could end up being faster and larger than
our forecast, as aggregate speculative net long positions across COMEX futures and
gold ETFs remain near record highs. As a result, we recommend initiating a short
COMEX gold position as our ECS Top Trade #8, implemented through an S&P GSCI®
front-month rolling index to benefit from the contango in the COMEX curve.
From Citi:
14:34 EDT - Citi Private Bank eschews gold for equities. "With global growth solidifying, demand for gold as protection against systemic risk has dissipated. We therefore remove our position in this asset class," Citi Private Bank says in a note, adding that the risk of higher interest rates is also intensifying, and this would also have a negative impact on gold prices. Instead, firm increases weightings in US, European and Japanese equities. Comex June gold settles down $27.90, or 1.8%, at $1,558.80/troy oz. (tatyana.shumsky@dowjones.com)
Despite resurgence in Euro area risk aversion and disappointing US economic data,
gold prices are unchanged over the past month, highlighting how conviction in
holding gold is quickly waning. With our economists expecting few ramifications
from Cyprus and that the recent US slowdown will not derail the faster recovery they
forecast in 2H13, we believe a sharp rebound in gold prices is unlikely. Given gold’s
recent lackluster price action and our economists’ expectation for higher US real
rates, we are lowering our USD-denominated gold price forecast once again. This
revision further increases our conviction that the turn in the gold cycle is
materializing and our new forecast is further below the forward curve with year-end
targets of $1,450/toz in 2013 and $1,270/toz in 2014. As a result, we recommend
closing the long COMEX gold position that we first initiated on October 11, 2010 for a
potential gain of $219/toz, with the risk reversal overlay expired on March 25. While
there are risks for modest near-term upside to gold prices should US growth continue
to slow down, we see risks to current prices as increasingly skewed to the downside
as we move through 2013. In fact, should our expectation for lower gold prices
continue to prove correct, the fall in prices could end up being faster and larger than
our forecast, as aggregate speculative net long positions across COMEX futures and
gold ETFs remain near record highs. As a result, we recommend initiating a short
COMEX gold position as our ECS Top Trade #8, implemented through an S&P GSCI®
front-month rolling index to benefit from the contango in the COMEX curve.
From Citi:
14:34 EDT - Citi Private Bank eschews gold for equities. "With global growth solidifying, demand for gold as protection against systemic risk has dissipated. We therefore remove our position in this asset class," Citi Private Bank says in a note, adding that the risk of higher interest rates is also intensifying, and this would also have a negative impact on gold prices. Instead, firm increases weightings in US, European and Japanese equities. Comex June gold settles down $27.90, or 1.8%, at $1,558.80/troy oz. (tatyana.shumsky@dowjones.com)
I manage money. I earn money. I save money .
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
0
Comments
-Paul
<< <i>This time who knows?I personally think the economy is on an artificial high!
that goes for me as well. i think when it crashes its gonna go BOOM. jmo
My guess is that declining metals and inflation would drive investors away from rare coins, but (in Goldman's rosy scenario) an increase in prosperity would create many new collectors.
Doggedly collecting coins of the Central American Republic.
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<< <i>I cannot stand investment companies that try to coordinate speculators to move a market. >>
+1
<< <i>Keep on stacking. PMs will be march back up. >>
Especially once the DOW tanks here shortly
US deficit spending, increasing debt - good for gold. There is no way this underlying trend will ever change. Even under Clinton the debt was hardly touched.
<< <i>I felt for years a new high for the Dow would crash gold >>
The DOW cycled between 600 and 1050 half a dozen times from 1966-1982 (5 peaks and 6 bottoms). For the most part none of those peaks ended the gold bull
market until the very last one. I suspect this next peak in the Dow will be followed by a huge decline not unlike what was seen from 2007-2009. The DOW will
follow a similar volatile trading range to 1966-1982 until the imbalances in the economy are mostly worked out.
http://www.sharelynx.com/chartsfixed/USDJIND1960.gif
Short silver? Load up on ZSL.
and the 10's will be like the 80's and 50's, for the various sectors and market trends. Maybe this generation has seen its stock bubble, it's housing bubble, and now it's gold bubble.
PS: there's a PM forum for this type of thread, check it out, 24/7 debating about the future prices of the metals and up to the minute commentary for anything PM related
Liberty: Parent of Science & Industry
<< <i>It's about time the bubble burst.
-Paul >>
Interests:
Pre-Jump Grade Project
Toned Commemoratives
Gold, Long a Secure Investment, Loses Its Luster
Below the streets of Lower Manhattan, in the vault of the Federal Reserve Bank of New York, the world’s largest trove of gold — half a million bars — has lost about $75 billion of its value. In Fort Knox, Ky., at the United States Bullion Depository, the damage totals $50 billion.
And in Pocatello, Idaho, the tiny golden treasure of Jon Norstog has dwindled, too. A $29,000 investment that Mr. Norstog made in 2011 is now worth about $17,000, a loss of 42 percent.
“I thought if worst came to worst and the government brought down the world economy, I would still have something that was worth something,” Mr. Norstog, 67, says of his foray into gold.
Gold, pride of Croesus and store of wealth since time immemorial, has turned out to be a very bad investment of late. A mere two years after its price raced to a nominal high, gold is sinking — fast. Its price has fallen 17 percent since late 2011. Wednesday was another bad day for gold: the price of bullion dropped $28 to $1,558 an ounce.
It is a remarkable turnabout for an investment that many have long regarded as one of the safest of all. The decline has been so swift that some Wall Street analysts are declaring the end of a golden age of gold. The stakes are high: the last time the metal went through a patch like this, in the 1980s, its price took 30 years to recover.
What went wrong? The answer, in part, lies in what went right. Analysts say gold is losing its allure after an astonishing 650 percent rally from August 1999 to August 2011. Fast-money hedge fund managers and ordinary savers alike flocked to gold, that haven of havens, when the world economy teetered on the brink in 2009. Now, the worst of the Great Recession has passed. Things are looking up for the economy and, as a result, down for gold. On top of that, concern that the loose monetary policy at Federal Reserve might set off inflation — a prospect that drove investors to gold — have so far proved to be unfounded.
And so Wall Street is growing increasingly bearish on gold, an investment banks and others had deftly marketed to the masses only a few years ago. On Wednesday, Goldman Sachs became the latest big bank to predict further declines, forecasting that the price of gold would sink to $1,390 within a year, down 11 percent from where it traded on Wednesday. Société Générale of France last week issued a report titled, “The End of the Gold Era,” which said the price should fall to $1,375 by the end of the year and could keep falling for years.
Granted, gold has gone through booms and busts before, including at least two from its peak in 1980, when it traded at $835, to its high in 2011. And anyone who bought gold in 1999 and held on has done far better than the average stock market investor. Even after the recent decline, gold is still up 515 percent.
But for a generation of investors, the golden decade created the illusion that the metal would keep rising forever. The financial industry seized on such hopes to market a growing range of gold investments, making the current downturn in gold felt more widely than previous ones. That triumph of marketing gold was apparent in an April 2011 poll by Gallup, which found that 34 percent of Americans thought that gold was the best long-term investment, more than another other investment category, including real estate and mutual funds.
It is hard to know just how much money ordinary Americans plowed into gold, given the array of investment vehicles, including government-minted coins, publicly traded commodity funds, mining company stocks and physical bullion. But $5 billion that flowed into gold-focused mutual funds in 2009 and 2010, according to Morningstar, helped the funds reach a peak value of $26.3 billion. Since hitting a peak in April 2011, those funds have lost half of their value.
“Gold is very much a psychological market,” said William O’Neill, a co-founder of the research firm Logic Advisors, which told its investors to get out of all gold positions in December after recommending the investment for years. “Unless there is some unforeseen development, I think the market is going lower.”
According to the World Gold Council, gold buying by global central banks in 2012 was at the highest level that we have seen since 1964
ZeroHedge makes debut at White House press corps briefing
But if gold is such a bad investment, then why are the central banks of the world hoarding gold like crazy?
The same reason so many Central Banks sold tonnes of gold during the 1990's driving the price down to mid 200's. That is to say, the Central Bankers are not great forecasters of gold. Usually doing the opposite is best for individual investors. Not saying that's true at this exact point in time, but sure something to be aware of.
<< <i>Stocks are currently making all-time nominal highs, and NOW they are moving more money into them??? Gold is down nearly 20% from nominal highs and now they recommend selling??? A bit late on both trends, methinks. A little more sentiment like this and both trends will be due for a turnaround. Gotta luv these guys. >>
Have you ever heard of the concept of "breaking through resistance"? Buying something at all-time
highs isn't necessarily a bad move.
The environment for the stock market is currently very positive and the strength of the dollar is
a major headwind for gold. I wouldn't buck either of the existing trends until some sort of technical
reversal is in evidence.
Bubbles burst and I expect the market to crash again. Why should the market be at an all-time high, with the economy still so bad and our national debt skyrocketing? If PMs drop a lot, I'm going to load up.
<< <i>A high stock market will siphon funds from other investment vehicles, including gold. The question is, what's driving the stock market higher? With a still tepid economy, propped up with artificially low interest rates and still more Quantitative Easings, I think it's a market bubble, caused by artificial demand. If folks were able to get a decent return on a Certificate of Deposit, a lot of money would leave the market, forcing stock values downward. Just as loose lending practices created artificial demand in the housing industry (prior to 2008), the Federal Reserve has created an artificial demand in the stock market (by keeping interest rates artificially low).
Bubbles burst and I expect the market to crash again. Why should the market be at an all-time high, with the economy still so bad and our national debt skyrocketing? If PMs drop a lot, I'm going to load up. >>
George sums it up nicely, above. It's not like the 90s, where the economy was strong and growing. The only reason unemployment is nominally down is due to the millions who have given up looking work who are no longer counted in the unemployment statistics. Law firms across the board are reducing salaries, and cutting back on new hires. Why? Because there's less work for them now than there was ten years ago.
Basically, money is going into equities because it has nowhere else to go for yield. Who in their right mind will buy a 10 year treasury paying 1.74% right now? Ditto re the recent uptick in real estate prices. It's all smoke and mirrors by one branch of the government printing money, and another branch buying much of it to keep interest rates low.
"Seu cabra da peste,
"Sou Mangueira......."
<< <i>Why should the market be at an all-time high, with the economy still so bad and our national debt skyrocketing? >>
Because the Fed has made a commitment to keep interest rates at historically low levels
for the foreseeable future and there are no viable alternatives for earning a decent
return on capital. The national debt increasing is hardly an indicator of negative
stock market performance. I refer you to the Reagan era on that one.
EDIT: Elcontador, if money has nowhere else to go right now, what do you think that
means for stock prices in the near term? Nothing goes up forever, so the argument
that one shouldn't buy stocks now because at some future time the market will
surely have a meaningful decline is pretty silly.
RAD#306
<< <i>Why should the market be at an all-time high, with the economy still so bad and our national debt skyrocketing? >>
The market is only at an all time high when priced in devalued dollars. The more they are devalued the better the market looks.
When one uses gold to price market data one sees the stock market is actually down 64% since 2004
"Even though an asset may rise in dollars, it may be because of declining currency value rather than economic progress."
ZeroHedge makes debut at White House press corps briefing
I knew it would happen.
<< <i>
<< <i>If metals continue to head lower, how would you expect that to affect the rare coin market?
My guess is that declining metals and inflation would drive investors away from rare coins, but (in Goldman's rosy scenario) an increase in prosperity would create many new collectors. >>
It depends on which rare coins. Look at the $20 gold series; the rare dates will keep going up as long as dates like the 1856-O, the 1861-O, 1862 and so forth have numerous collectors who compete for those trophies.
Remember when gold broke $1200 for the first time? MS62 $20 Saints were trading for over $1700 for a while. I am selling some MS63s now for $1700 with melt being over $1500! The premiums are tiny now.
If gold shot up over $1700 in a surge, there would be a short term supply gap with bids stacking to buy at higher and higher prices. If gold collapsed, it would depend on the market makers like Rarcoa, Spectrum and Heritage, the current collectors and the background demand as well as new collectors to maintain significant premiums. >>
Since rare coins and bullion are typically inflation hedges, I'd think that most investors would leave the rare coin/bullion markets, if inflation looks unlikely, in search of greener pastures. A rising stock market and a relatively stagnant bullion market would make me itchy to leave bullion for stocks, if I had positions in bullion/rare coins (and if I didn't fear inflation.)
<< <i>But if gold is such a bad investment, then why are the central banks of the world hoarding gold like crazy?
According to the World Gold Council, gold buying by global central banks in 2012 was at the highest level that we have seen since 1964 >>
When everyone else is buying, it's time to sell.
<< <i>But if gold is such a bad investment, then why are the central banks of the world hoarding gold like crazy?
According to the World Gold Council, gold buying by global central banks in 2012 was at the highest level that we have seen since 1964 >>
Some people like to claim that the central banks, particularly the Fed, always do exactly the wrong thing
Liberty: Parent of Science & Industry
<< <i>We had one major client who cashed out about 3,500 ounces when gold hit $1,000 because it wasn't going to get any higher. >>
poor fellow! Had to walk away with his $3.5 million
Liberty: Parent of Science & Industry
Taking profits and....my goosh... there still is demand.
There will be demand at $1300 and at $1700.
If the FED raises rates 2%, game set match. It' s OVER.
If gold fades, entities are surrendering it to cover & stay liquid.
Just remember that GS faded Heinz as Berkshire was accumulating before
the buyout. Gotta love Goldman and the Times. Tools.
<< <i>We had one major client who cashed out about 3,500 ounces when gold hit $1,000 because it wasn't going to get any higher. >>
More than one great fortune was made by selling too soon.
<< <i>
<< <i>
EDIT: Elcontador, if money has nowhere else to go right now, what do you think that
means for stock prices in the near term? Nothing goes up forever, so the argument
that one shouldn't buy stocks now because at some future time the market will
surely have a meaningful decline is pretty silly. >>
Near term...no idea. The problem is that at times like this, people act like lemmings and a herd mentality sets in. Hence the rise to where we are now.
People / fund managers have been investing in blue chip companies which pay solid dividends. What we're now are seeing is P/E ratios which are getting ridiculously high. This has been the case with utilities for awhile, and with the recent run up in big Pharma - like Pfizer, et. al., you're beginning to see it here as well.
At some point, people will realize that "the emperor has no clothes." What usually happens is that a number of people come to this realization at the same time, panic sets in, and the market takes a dump.
If this continues for another week, I might do some selling and watch the train-wreck from a front row seat.
"Seu cabra da peste,
"Sou Mangueira......."
Last I checked, a properly diversified portfolio was the best way to make money. Obviously people can argue over the percentages you hold in each, but if you own stocks, bonds, pm's and real estate the odds are that you'll consistently make money. Also, you can throw in a percent or two of more "untraditional" investments such as rare coins, rare wine, fine art etc. and have some fun along the way.
U.S. Type Set
<< <i>Some people like to claim that the central banks, particularly the Fed, always do exactly the wrong thing
It's always the right thing, just for the wrong crowd.
ZeroHedge makes debut at White House press corps briefing
<< <i>It's always interesting to me to read threads on pm's on these boards. People tend to be either totally pro-pm's or they think that pm's are a waste of time.
Last I checked, a properly diversified portfolio was the best way to make money. Obviously people can argue over the percentages you hold in each, but if you own stocks, bonds, pm's and real estate the odds are that you'll consistently make money. Also, you can throw in a percent or two of more "untraditional" investments such as rare coins, rare wine, fine art etc. and have some fun along the way. >>
Sound advice, Skyman.
I'm goin' all in!
You heard it here first!
<< <i>
<< <i>It's always interesting to me to read threads on pm's on these boards. People tend to be either totally pro-pm's or they think that pm's are a waste of time.
Last I checked, a properly diversified portfolio was the best way to make money. Obviously people can argue over the percentages you hold in each, but if you own stocks, bonds, pm's and real estate the odds are that you'll consistently make money. Also, you can throw in a percent or two of more "untraditional" investments such as rare coins, rare wine, fine art etc. and have some fun along the way. >>
Sound advice, Skyman.
Agreed, best advice I have seen on the forum since TDN told RYK to collect trade dollars
<< <i>
Bubbles burst and I expect the market to crash again. Why should the market be at an all-time high, with the economy still so bad and our national debt skyrocketing? If PMs drop a lot, I'm going to load up. >>
Because the economy has made a stunning turnaround and under President Obama federal spending is growing the slowest rate in decadeas.
<< <i>It's always interesting to me to read threads on pm's on these boards. People tend to be either totally pro-pm's or they think that pm's are a waste of time.
Last I checked, a properly diversified portfolio was the best way to make money. Obviously people can argue over the percentages you hold in each, but if you own stocks, bonds, pm's and real estate the odds are that you'll consistently make money. Also, you can throw in a percent or two of more "untraditional" investments such as rare coins, rare wine, fine art etc. and have some fun along the way. >>
Level headed and wise. Never seems to happen in a pm discussion.