Goldman Sachs Is Highly Motivated To Low-Ball The Price Of Gold

The distinguished analysts from Goldman Sachs reiterated their 2014 forecast for gold to hit $1,050 by the end of the year.  They believe the paper price of gold will continue to decline as the supposed “Powerhouse” U.S. economy picks up speed and accelerates growth.

If someone recently had a frontal lobotomy… this forecast might make perfect sense.  On the other hand, if a person belongs to the 95-99% group of Americans who believe everything coming from the Boob Tube, this forecast is exactly what the doctor ordered.

Goldman isn’t that stupid to realize the well-educated precious metal investors don’t believe a word coming from the bank’s talking heads, rather their forecasts are designed and targeted at Americans who still believe in the Greatest Fiat Ponzi Scheme in history.

Furthermore, Goldman Sachs has serious motivation for throwing the paper price of gold under the bus.  You see… Goldman is by far the weakest and most vulnerable bank when it comes to its Assets to Derivatives ratio.  Not only does Goldman rank DEAD LAST compared to the other banks in this ratio, it does so with flying colors.

Here is the most recent break-down of Derivatives holdings by the top 25 U.S. Commercial Banks:

Q4 2013 OCC Banking Derivatives Report

This is a table from the OCC’s Q4 2013 Report on Bank Trading and Derivatives Activity.  Let’s focus on the top 4 banks.  You will see that while Goldman has $48.6 trillion in derivatives on its books, it only has a measly $105 billion in assets to back it up.

Dividing each of the top 4 U.S. banks assets to derivative holdings, we have the following percentages:

Top Commercial Zombie Banks Assets to Derivatives

Starting with the best of the worst Zombie Banks, Blank of America has a 3.9% asset to derivatives ratio, while JP Morgue’n comes in second with 3%, Citicorpse follows third at 2.2% and Goldman Sacked places dead last with a pathetic 0.2%.

Goldman Sacked doesn’t have much in the way of assets to back up those $48.6 trillion in notional derivatives.  I find it simply hilarious that the bank with the worst asset to derivative ratio has the gall to throw out a STINK BID of $1,050 gold.  But we really can’t blame them as they have the most to lose if things were to get out of control in the markets.

Goldman Sacked:  The King Percentage Holder Of Interest Rate Swaps

Another reason Goldman has more SKIN in the game to delude Americans of the value of gold is their exposure to the Interest Rate Swap market.  Out of the top 7 U.S. Banks, Goldman Sacked holds the highest percentage of Interest Rate Swaps:

Top 7 Banks Derivatives Table

Here we can see that Goldman has invested 95% of its derivatives in Interest Rate Contracts.  Which is why Goldman also needs the Fed to keep interest rates low.  If interest rates were to rise substantially, Goldman would be on the losing end of the trade.

The global financial system is leveraged more than ever.  Leverage is great on the way up, but certainly a BEE-OTCH on the way down.  So, we precious metal investors need to understand that these banks are forced to LIE, CHEAT and STEAL even more as the leverage on their balance sheets becomes greater…. especially GOLDMAN SACKED.

Lastly, to all the PRECIOUS METAL GADFLY’s who enjoy going around to all the sites sharing their wonderful wisdom that gold and silver are lousy investments…. please continue to do so.

We all enjoy a good laugh once in a while.

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33 Comments on "Goldman Sachs Is Highly Motivated To Low-Ball The Price Of Gold"

  1. Most entertaining to me are the people that have tidbits of information but have decided they and only they know how everything will unfold or unwind. And they have to disagree with the preponderance of credible experts out there.

    Or that it won’t unwind. The Western world governments and bankers will always be able to manipulate prices of PM’s. But [hedging] if they can’t then they will regulate sales or acquisitions of PM’s. Or they will confiscate. Or isue executive orders. BS.

    In 1933 U.S. citizens dutifully turned in gold thinking they were doing the country a service. Most wouldn’t turn in anything now regardless of executive orders. And make whatever illegal; an underground or black market will arise.

    People will turn in gold just like they will turn in their firearms.

    • David, never under estimate the stupidity of the Gentile herd. The people of Australia turned in their firearms, and Americans will do the same for the same reasons. Those who don’t will risk losing everything. The American sheeple are conditioned from birth to worship authority and obey any piece of crap wearing a badge or government uniform. Christianity was designed by the Romans to be a religion of pacifism and obedience to government authority, not that there are very many Christians left in America, but our culture is one of pacifism and obedience.

      • Furthermore, I would estimate that less than two percent of the Gentile herd has ever held a gold coin thier hand. If you have any gold or firearms, I advise you to keep this information secret from everyone. In the near future, possessing these items will brand you a domestic terrorist. The people you call friends will become two-faced rats after they miss a couple of meals. I hope my remarks have not offended you.

        • AGREED. You do yourself NO FAVORS and possibly HUGE headaches by just casually mentioning your hoard of gold, silver, and GUNS

      • Khun Dang, Paul is correct when he says you don’t know what you are talking about. You do not understand Christianity whatsoever which is really not surprising because one needs to be a TRUE Christian first then comes understanding. What you see on TV, what you hear on the radio or from the Vatican is not TRUE Christianity (like MSM propaganda about markets, silver, gold). You were diligent to search out the truth about silver and gold, this was good. Apply that same diligence toward finding out what is REAL Christianity and the TRUTH will find you.

    • David, who is paying you? Be a man and stop deceiving people!

      The PM manipulation is going to end the same way the london gold did. The whole “system” is dependent on a steady flow of both gold and silver! Both metals have been in and out of backwardation!!! People are losing faith and confidence in the system!

      Why is this so hard to understand!

      Also, the majority of the people that were lucky enough to have gold bullion back in ’33 did not turn in their gold. Pick up a history book!

      • Andrew,

        Why is it so hard for you to understand my communication which is in essence agreeing with the same thing you are saying.

        Of course the manipulation is going to end at some point.

        I don’t suppose during the depression very many Americans had gold coins; i have no idea how many holding them turned them in as instructed. Does anyone had credible data on that? I never seen any mention of it along with any article that mentioned gold confiscation in 1933. Some complied with it.

  2. Khun Dang Christianity is alive in America. Christianity was not designed by the Romans. Learn your history. If you watch the news many Christians stood up to the BLM in Bunkerville Nevada. The remaining Christians will stand up for the constitution and the freedoms of this land. If you love freedom don’t trash talk our religion or we won’t get along.

    • I would like to think that many will stand up for freedom but I fear it’s going to get ugly and a very close thing. I’m not giving up without a fight but it will take some from the govt to switch sides to make it work. the Federal thugs are a sick bunch (and there’s a lot of them) but maybe enough state & local officials will step up. that’s the best hope.

    • Paul you are correct. However, just as many who profess to be Christian will not get off the sidelines. Consult Matthew 7:13-23 for Jesus take on those that think they are a part of the Body of Chris but are not. Also Revelation 4:14-20 speaks very true to the 95% of American Christians.

      To Khun Dang I ask, why was Paul the Apostle, who wrote most of the New Testament imprisoned in Rome for preaching the Gospel? That doesn’t sound like a Roman approved religion does it? Also, Jesus said he was the ONLY way to God. Romans were/all polytheistic (yes praying to saints is an act of going to another intercessor for your sins. Read 1 Timothy 2:5 and stop praying to Mary!).

      As for Gold being outlawed, Christians will be outlawed too! Read the Book of Revelation (Ch.13). That won’t stop me from bartering with silver or preaching the gospel.

      • I have read about the history of this man-made religion. The New Testament, which controls your mind, was first codified and published by a Roman Ceasar named Constantine. The Old Testabment was written by Babylonian Talmudic rabbis. Your religion is full of corruption, and your religious leaders are members of occult secret societies. I am aware that many Americans call themselves Christians, but when I examine their lifestyles and attitudes, what I see is that they worship money and pleasure. With your minds filled with such propaganda and mythology, you will never be able to think clearly, and you will blindly follow your occult puppet masters straight into Hell.

    • Paul you are correct. However, just as many who profess to be Christian will not get off the sidelines. Consult Matthew 7:13-23 for Jesus take on those that think they are a part of the Body of Chris but are not. Also Revelation 4:14-20 speaks very true to the 95% of American Christians.

      To Khun Dang I ask, why was Paul the Apostle, who wrote most of the New Testament, imprisoned in Rome for preaching the Gospel? That doesn’t sound like a Roman approved religion does it? Also, Jesus said he was the ONLY way to God. Romans were/are all polytheistic. Yes praying to saints is an act of going to another intercessor for your sins. Read 1 Timothy 2:5 and stop praying to Mary!

      As for Gold being outlawed, Christians will be outlawed too! Read the Book of Revelation (Ch.13). That won’t stop me from bartering with silver or preaching the gospel.

  3. Great article Steve.

    You can feel it coming. Soo many plates spinning at the same time.

    Independence in Water, Food, Energy and Security form the perimeter of wealth preservation. Its only the end of the world for people dependent on the system…for basic sustenance. It wont be a cake walk but prepared is better than dependent.

    I have been stacking some powder, i have a feeling they are going to attack the paper price again. Hope 18.15 holds. No matter…I will buy more under 19 either way.

    I keep hearing all these people telling me that silver is for barter and gold is for long term. I would advise not pulling them out during a collapse. Mums the word. You will know the time when currency is fully exchangeable for some real value/money reserve….

    It would really give me a bit of vengeance to see the Gold Suck go down.


  4. The derivatives will never be a problem because no TBTF bank will ever go down in B.K. That is why Bank of America was saved by the government algo magic machines when it went almost under $5 per share and began its death spiral (this was after the 2009 crises BTW).

    So yeah, moron, keep telling everybody to load up in PM’s when they won’t do anyone any good for anything. Buy Bank of America and Goldman Sachs. YOU WILL AT LEAST COME OUT AHEAD.

    Articles like this are just stupid. Even Buffett said there are no worries, he “guarantees it.” with the big banks and that they are on more sound footing than ever!

    Jeeeeeesh! and this Steve guy has a following? How much money you making by following his drivel?

  5. Hey Jackie boy, while the vampire squids enjoy their post-coital cigarette, do remember to wipe their dripping cum from those fat and ugly butt-cheeks of yours.

    I think you’ll find that sex-for-comment is not as rewarding as you think it is. Though depending on your perspective, perhaps equal only to the counterfeit money you might otherwise line your pockets with.


  6. shale gas is like squeezing water out of sponge, sucking up the last drops before it completely dries up.

    but precious metals entered the “shale gas” stage decades ago.

    aren’t the modern grinding and acid treatment of gold/silver containing dirt just like shale gas?

    there are very few high grade mines still producing. all the low-hanging fruits are gone a long time ago.

  7. Great article, where are all the banker shills

  8. Goldmans is performing an anniversary pi$$ on gold. Remember what they did around first quarter last year. Goldmans, Bernanke and the EU performed a circle j*** on gold. They raided the Cyprus banks and Goldmans massive short on gold.

  9. On the subject of anniversaries. How about the May 1st – OBL re killing – Silver smack down combo? Watch out for this May Day GS smackdown.

  10. Someday we’ll look back and see that the CME and our government have maintained policies that encourage consumption in the face of declining resources including oil and silver. Naked shorting, off hours market smashes only encourage higher demand. Of course we can continue this policy, and we certainly will, until that day arrives when we can’t. There will be no warning, no preparation, it will just hit us like a freight train.

  11. Things are getting stranger by the day in the ‘markets’. Belgium bying up $341 billion in treasuries, hft flash crashes, India reports a lot less on China imports then China says it’s exporting to India, stagnating economies, ultra low yields in periphery paper. Should be a big mess when the energy problem hits full force.

    It’s an unbelievable pile of shit in paper markets, leave while you can.

  12. Outlookingin | April 16, 2014 at 3:46 pm |

    Good article Steve and how to set the “facts” straight.

    You are spot on when you say “their forecasts are designed and targeted” at the – as yet to be enlightened ones. So sad that most will remain in the dark, as does Jack!

    The blatant lies, deception and outright falsehoods, put forth by the crony capitalistic plutocracy are so in-your-face to those that see it, as to become tragically laughable. This is nothing more than reinforcing/repitition conditioning for the dumbed down masses and those whom I describe as “ostriches” like Jack, who refuse to ackowlege whats right beneath their noses!

    This will continue to work for them – until it doesn’t! I look forward to that day with great anticipation.

  13. I generally agree with this article, and I’m diversified into physical gold and silver. However, this statement is a little misleading: “Lastly, to all the PRECIOUS METAL GADFLY’s who enjoy going around to all the sites sharing their wonderful wisdom that gold and silver are lousy investments….”

    Gold is not an investment. It’s a currency. Just a store of real value. A $20 gold coin from 1900 bought a very nice suit in 1900, and today that same coin will buy you a very nice suit. The real value of gold does not change over time. It’s not an investment because it’s just an unproductive rock. Stocks are investments because they are productive. Look at the long term returns of stocks, bonds and gold over time and stocks win for sure. See page 7 here:

    What the chart shows is that gold maintains value and the dollar measured against gold loses value (when not pegged). Gold (like anything) can become inflated (’70s) yet always reverts the its mean. It should also be obvious that paper currency growth is invariably negative (owing to the inflation tax), and the mean for gold is 0%, debt is about 3.5% and for equities is about 7%.

    In other words, if gold goes to $20,000/oz, it means the $US fell in value tremendously and everything will be very expensive in $US. So if you bought a lot of gold now, it’s a hedge against the fall in the $US and you will protect your real wealth. But you won’t be wealthier in real terms because everything is going to be very expensive. Your oz of gold will by the same amount of goods as it did when the $US was stronger and gold was lower. Gold can give real returns when it goes into a bubble like it did in the ’70s. But remember it also came crashing back down. Just look at the chart above on page 7 (and see rest of the report) and it’s pretty clear that over the long run, stocks (which represent people working to create and produce) are the better long term “investment.” Sure, stocks can crash also, but the longer term data explains that a rock can’t produce value, but people can. Any asset against the $US will go up when the dollar collapses – stocks, oil, homes, etc. Gold is not an “investment”, but just a currency that can’t be printed.

    • Michael,

      You are correct when we think of gold and silver just as money. However, when we factor in the energy situation… then gold and silver are investments. I discuss this in more detail in coming reports.


      • I look forward to your other reports. Thank you for considering my perspective. Great articles!

    • Outlookingin | April 16, 2014 at 11:51 pm |

      Physical gold and silver are NOT currency. Gold and silver are true money. Have been since the dawn of written history and will continue to be the ONLY true money.

      All the rest are just currency, with a finite life span. Eventually their worth receding back to zero.

      • I agree with this statement. I meant “money” when I said “currency.” There is no liability attached to gold or silver whatsoever. But it has no productive capacity. I can’t buy it and earn profits/dividends. I can do that by investing in a team of good people. A diversified portfolio of stocks, real estate, metals, energy, etc. is a respectable way to play the upcoming crisis. But no one should take all their investment dollars and buy only gold and silver. That would be very risky. Might make a lot of money, but you would also have to time the exit. Don’t get me wrong, I’m long physical. It’s a great insurance policy for when this all blows up. I love the gold mining stocks. Those have real leverage and could make huge returns. Already doubled/tripled my money since buying at the bottom last fall in a few of them. Those are productive assets. People have to work to dig a valuable rock out of the ground.

  14. gold/silver will become more precious in the future because they become more useful and are consumed more and become more rare. in this sense, god/silver are investment too just like antiques.

  15. Been reading this blog for a while now, very interesting and informative.

    I wanted to respond to Michael’s point about gold being essentially flat in value over time against real assets. I think that whilst this maxim has a bit of truth to it, it fails to take into account a couple of very important things.

    i. In a free market capitalist set up, we would actually expect gold to buy more real assets over time, because in those circumstances productivity improvements actually result in price reductions. A suit made 200 years ago isn’t the same as a suit made today because of the capital involved now that allows for much cheaper production. Comparing a hand-made custom suit of today to the typical suit from yesteryear is apples and oranges, as essentially there are very few tailors left (in the west at least) who make bespoked suits from scratch.

    ii. The idiom also ignores population growth. This is the key factor in my view; compared to Roman times, we have perhaps 50 times as many people on the planet now. Even if we take the view that relatively more people then used money rather than a more simplistic barter system (very doubtful in my view), we still end up with the reality that whilst at least 10x as many people today use money, the claim is that gold still buys the same real assets as then(!). This is clearly nonsense.

    iii. The idea that the dollar value assigned to gold today is anywhere near its correct valuation is highly doubtful. We know that the paper price is manipulated, and has been since the Fed came into being 100 years ago. Based on relatively scarcity versus other assets, particularly financial assets, gold looks significantly undervalued. Certainly the prevalence of fiat currency has pushed up the $ quantities for land and property, and other real assets but at the same time we’re expected to believe that the price of gold has essentially gone nowhere in the last 35 years during a period of unprecedented growth in financial assets. Again, absent direct and massive manipulation in the precious metals markets, this simply doesn’t stack up.

    The end result is that gold, whilst not under normal circumstances an investment, is undervalued enough relative to other asset classes (I’m thinking here primarily real assets rather than financial ones) that there is likely to be a return on holding gold purely from its eventual rebound to be properly priced vs. other assets.

  16. Steve

    I’ve commented previously how much I enjoy your facts, figures and informed analysis. That said, it would be interesting to see energy costs associated with the primary silver miners broken down to a per ounce cost number. Today, for example, oil prices are over $104.00 while silver is priced at $19.65. You’ve been very detailed in your cost per ounce production costs so busting this number our might be an interesting metric to look at.

    Granted, the miners have put themselves into a nightmare situation that they have only themselves to blame, but as oil price climbs penny by penny so to will the cost per ounce to produce and transport silver to end user markets.



  17. “Granted, the miners have put themselves into a nightmare situation that they have only themselves to blame…”

    I suspect a thorough PM manipulation strategy includes some forms of pressure, coercion, or implied consequences of miners raising their selling price to refiners [or refiners raising their refined product cost], regardless of ETF & manipulation set spot prices. At least in the U.S. and other places their influence extends to.

    Fiat income streams are needed in Mexico, Peru, and other nations, and the prices suppressed by commodities futures manipulation schemes result in these countries selling their natural resources for whatever they can get.

  18. Steve, are you still going to have paid reports in the future or have your plans changed ?

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