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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.
Conclusion
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.)
Related Articles from the munKNEE Vault:
1. JP Morgan Is Stockpiling HUGE Amounts of Physical Silver – Why?
Why in the world has JP Morgan accumulated more than 50 million troy ounces of physical silver since early 2012, adding more than 8 million troy ounces during the past couple of weeks alone? Why are they doing this? What do they know that the rest of us do not? Could it possibly be that they are anticipating another great economic crisis? We are definitely due for one! Here’s what I think is going on behind the scenes.
This is a great example of why the TPP is a bad deal for the USA, since when other Countries devaluate their currency it makes US products more expensive, which then causes layoffs of US workers since they cannot compete against low paid workers in foreign countries! Big Corp’s might profit but for the Middle Class Workers is means their jobs are less competitive Globally.
Remember what happened right after the US signed the NAFTA agreement which was supposed to increase trade with Mexico? Immediately after signing the agreement “to improve trade between Countries” Mexico devaluated the value of their peso which meant that US Goods really became unaffordable in Mexico, while Mexico could then “flood” the US with their “low cost” goods, which lead US Corp’s to move manufacturing jobs to Mexico to take advantage of low cost workers!
Stocks dive as China devalues yuan; oil drops 4%
http://www.usatoday.com/story/money/markets/2015/08/11/stocks-tuesday/31452299/
Snip
U.S. stocks tanked Tuesday after a surprise overnight move by China to reduce the value of its currency in an effort to provide a boost to its lagging economy by making its goods more affordable to foreign buyers.
The move was greeted negatively by Wall Street as it suggests the world’s second-biggest economy might be in worse shape than believed.
Over the weekend, China reported that its exports fell more than 8% in July. While a weaker yuan makes Chinese exporters’ products more affordable abroad, it makes U.S. goods exported to China more expensive, which could crimp sales and profits of U.S. companies that do business in China. In short, a weaker yuan makes U.S. products less competitive in China.
China’s Market losses and now the devaluation of the Yuan will inspire many to take a good hard look at acquiring physical Gold and/or Silver.
Got PM’s?
Also posted: https://munknee.com/the-gold-silver-ratio-heres-what-it-indicates-could-happen-soon/#comment-162164