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

The distinguished analysts from Goldman Sachs have reiterated their 2014 forecast for gold to hit $1,050 by the end of the year.
Goldman has a 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.


From the SRSRocco Report:

The distinguished analysts from Goldman Sachs have 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, accelerating 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 a 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.

If we divide the top 4 U.S. banks assets to derivative holdings, here are the 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 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 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

 

 

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Here we can see that Goldman has 95% of its derivatives invested in Interest Rate Contracts.  Which is why Goldman 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 more leveraged 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 the 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.


Comments

  1. Steve you ROCK!
    I’m so glad you are on our side!!

  2. Time to get it over with, reset the dollar, dismantle the US government and start over.

  3. two side items. 
    mortgage originations are down in the first quarter 2014  anywhere from 50% to 90%  WFB was down 75%.  Citi 90%.  Others equal to these   this is a disaster for the housing market and with the private equity firms getting their heads handed to them on the buy and rent schemes, the housing market will  crater this year and badly.
    When interest rates are at near historic lows and yet people cannot afford to buy or are declined by their lenders, this is not good at all
    In the Eurozone the EU Parliament passed some new laws. One of which was called Bank Restructuring and Restoration Doctrine that outlines specific plans to use bond holders and creditors to bail in failed banks.
    Creditors are depositors.  Those depositors with account of more than 100,000 euros would have their accounts confiscated to bail in failed banks
     
     

    • @AGXIIK
       
      “When interest rates are at near historic lows and yet people cannot afford to buy or are declined by their lenders, this is not good at all”
       
      Indeed not.  But your comment reminded me of a recent home-builder ad in our local paper.  They were trumpeting the fact that they have a number of models for sale that are priced at $100 a sq. ft.  Somehow, that still seems expensive to a cheap old tightwad like me.  :-/
       
      Oddly enough, existing home sales for March 2014 were 465 for the local county, which is not a bad number for this area.
       
      “In the Eurozone the EU Parliament passed some new laws. One of which was called Bank Restructuring and Restoration Doctrine that outlines specific plans to use bond holders and creditors to bail in failed banks.  Creditors are depositors.  Those depositors with account of more than 100,000 euros would have their accounts confiscated to bail in failed banks
       
      If that does not convince people in the EU to remove their money from these banks, I do not know what will.  Maybe they are waiting for a full-on Cyprus event to occur?  Of course, when it does, it will be far too late for them to do anything about it.
       

  4. Disgusting  sewage factory of corruption and fraud.

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