On August 6, 2015, Goldman Sachs and HSBC took delivery of a sum total of 7.1 tons of physical gold*. Are Goldman and HSBC now creating a “Big Long” in gold? If not, what are they doing – and what should you do as a result? Read on.
The above comments, and those below, have been edited by munKNEE.com (Your Key to Making Money!) for the sake of clarity  and brevity (…) to provide a fast and easy read and have been excerpted from an article* by Avery Goodman as posted, in part, on SeekingAlpha.com under the title The ‘Big Long’ – Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold and which can be read in its unabridged format HERE.
Goldman Sachs bought 3.2 tons worth of physical gold bars while at the same time telling their clients not to do it. According to Goldman’s Jeffrey Currie, the long-term outlook for gold is bleak, saying: “In longer term, we definitely like playing this market on the short side. We think we are in a structural bear market, not only in gold, but across the commodity complex, as the individual commodity stories are reinforcing to one another, creating a negative feedback loop.”
HSBC bought 3.9 metric tons even as their “strategists” told everyone, a few days before we all learned about the 61% increase in gold imports to India in the April to May period, that it was a bad investment saying that there has been a “drift towards Fed tightening and the associated USD strength, low global inflationary pressure, weak gold demand from India and China and market positioning and momentum.”
Why would these two banks make such a huge long-term investment in physical gold bullion bars? Perhaps, we are seeing a “Big Long,” similar to the “Big Short” Goldman Sachs is known to have taken in 2006/07. There are many who believe that we are soon going to see the collapse of a worldwide bond bubble, just as we saw a worldwide collapse of real estate values back then.
Maybe, these banks know something. Top bank executives don’t appear to trust counter-party promises. For example, why not buy an equivalent amount of gold in the form of shares in a highly liquid, easily traded gold trust? HSBC is actually the custodian of the alleged gold bars inside GLD, so you would think they would view it just as good as gold? Apparently not…
Whatever is going on, it is a big deal because absolutely no one who really believes long-term gold prices will stagnant or decline would buy 7.1 tons of physical metal.
Physical gold is a long-term investment, everywhere and always. They are not particularly hard to sell, especially now, but short-term trading would be much easier with paper-gold products like GLD or gold futures. Remember, vaults cost money, as do big men with big guns and the knowledge of how to use them. The banks are choosing to accumulate and hoard physical gold bars for a reason.
The last place you want to be, when things “hit the fan,” is on the opposite side of a “Big Long” trade. That’s why, if you are now holding short positions, take your profits before it is too late.
*http://seekingalpha.com/article/3421396-the-big-long-goldman-sachs-and-hsbc-buy-7_1-tons-of-physical-gold?ifp=0 (The timing and size of Goldman Sachs’ and HSBC’s recent gold purchases can be confirmed in this COMEX delivery report.)
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