If Goldman takes the opposite side of the trade, “long dollar” is about to get crushed. As for “Barbarous Relic” guy, well, we know the inverse of the US fiat currency crisis and dollar collapse is a gold skyrocket, no matter how much pressure they try to bring down on it…
Goldman Sachs is out there today promoting the “long dollar” trade. Many analysts and traders realize that often times, Goldman takes the opposite side of the trade they recommend.
For a hypothetical, if Goldman says “Sell ABCDEFG”, that is because they themselves sold ABCDEFG short, and now they need to buy ABCDEFG to close the trade and rake in the profits. Naturally they would not want you buying ABCDEFG, or even just holding it for that matter.
Well today, Goldman’s “Co-Head of Global Fixed-Income Portfolio Management’ Mike Swell is out there with a “buy the dollar” recommendation:
“The biggest pain trade, no question, has been the dollar,” Swell said in an interview on Bloomberg TV. “You really have to look at the fundamentals and step back from geopolitical risk, political risk in the U.S., weaker inflation over the course of the last few months, and really look at what’s going on from the economic perspective” in the U.S., he added. “The dollar is very, very attractive right now.”
Mr Swell must be taking the last 3+ years out of consideration for fundamental analysis, because that is when the dollar started it’s latest, and quite possibly last, strengthening run against other debt based fiat currencies.
It is somewhat reminiscent of the guys who were calling oil’s bottom at $50, then again at $40, then at $35, and then finally not calling anything when it hit $26.05 in February of 2016.
Furthermore, Mr Swell believes the “fundamentals” in the United States actually signal strong growth and tax policy reform:
“The fundamentals lie in the U.S., where you have stronger growth, and you have the potential for tax policy change, which can make a big difference,” Swell said. “At this point, from a dollar perspective, it makes sense to start really considering getting long the dollar, particularly relative to some of the other developed-market country currencies.”
What is the translation and the take-away from Mr Swell’s choice words: Goldman is long the dollar and wants you to sell to them so they lose less money.
If this is truly the case, which it may very well be, this means that the dollar price of gold is about to surge, as in we haven’t seen anything yet. We haven’t even started to warm up.
So to counter the pro-dollar talk, while attempting to be pro-gold, even though it is really anti-gold, one of the “barbarous relic” club members himself, Mr Michael Batnick, is out there with a “buy gold” article.
If you are new to gold & silver, understand that when anybody in the MSM says “buy gold”, its not so much a “buy gold” recommendation as it is a “buy gold if you want, but it really isn’t worth your time or dollars because of all of these fake reasons I’m about to tell you about” recommendation.
Now we take a lot of heat for our own technical analysis, so we won’t try to divulge into the numerous errors in his technical analysis, but, nonetheless, Barbarous Relic Guy’s “plain English” analysis has more holes than some American-made Swiss cheese pushing the limits of shrinkflation.
Here are a couple spinets from his article. Notice just how crazy you must be if you ever have the idea to give your child a Gold American Eagle on his or her birthday:
The chart below shows when you would have been invested in gold and when you would have been out. Granted, prior to GLD, this could only have been done with futures contracts, or gold bullion, with the former adding a degree of leverage that I would not have been comfortable with, and the latter adding a degree of paranoia that also would have made me uncomfortable.
So while he is saying go ahead and buy gold if you want to, the burden is on you, who has to suffer the consequences of your own paranoia.
This is like saying:
“Go ahead and use any type of transportation if you want to, but just see how well you deal with the added stress of your own euphoric hysteria when you realize that you were once in one place but now you are in another”
Makes a whole lot of sense right?
Now, if you think I’m off base here or if he was just joking, think again, because the joke is on anybody who buys gold:
I think that this simple trend following rule should continue to be effective in the future. The reason why trend following works with gold is because gold doesn’t trade on fundamentals, it trades on sentiment and emotion”.
Please understand that his question is as objective as we can make it, with no emotion or feeling at all guiding our inquiry: WTF?
And just so we’re clear, the paranoid sentiment that can be the only driver to buy gold according to Mr Batnick, is not the same when you or I buy gold. You see, he is doing it all in the name of science to prove his point that you would have to fall of your rocker to even have the thought of buying gold:
I’m violating my own rules by talking about an investment publicly and I’ll admit that this is driven in part to protect my fragile ego.
By the urgency of his “violation” and the superiority of his good name in being well above any degenerate who might be considering a purchase of a gram or two of the yellow metal, you know, just in case, understand that he is supposedly doing it in spite of his best judgement, on the sheer objectivity to prove his point, perhaps for the betterment of mankind, although we haven’t really found any social justice traders. After reading his article points over and over, and over, and over, to try to come to his conclusion, we are not exactly sure what his point is.
But then again, we are not psychologists, or psychiatrists, so in addition to being on the vanguard as one of the the foremost awesomest traders who stands ethically far above any person who has ever fallen symptomatic with the malevolent consideration of buying one of the elements on the periodic table of elements, Michael Batnick knows best.
Besides, all we do is base our interest in sound money, not just because gold & silver have stood the test of time for thousands of years, but because it is clearly mandated in the United States Constitution, Article 1, Section 10:
“make any Thing but gold and silver Coin a Tender in Payment”
And while Goldman and Batnick are free to say anything they want about gold & silver because of that other thing written in the Constitution, we respectfully ask that before doing an urban metro street-actor interpretation of a wet noodle trying to argue it’s way out of a paper bag, they bring a real argument which goldbugs and silverbugs would gladly entertain (even though they would get destroyed to our amusement).