Goldman Sachs raised its gold price target to $1,300 per ounce last week. In one of its recent reports, it gave a strong buy signal for the precious metal. This latest advice caused a brief increase in the spot price of gold due to unaware investors making purchases. Unaware because they are not familiar with the fact that the firm tends to put its client’s interests in last place.
Some analysts were wise to this fact and claimed that the signal from Goldman meant that the firm was offloading. They advised investors to be wary regarding market dynamics during the next four weeks. Unfortunately for those who invested, their prediction turned out to be true.
There is a small note in the fixed income strategy section of the latest installment of Perspectives from Goldman Sachs Asset Management, which is intended for broker-dealer, financial institution, or institutional investor use only. It is not for distribution to clients or the general public. It states, “Shifted our stance on gold after years of being long; see gold as vulnerable to Central Bank inactivity in the face of rising deflation risk.”
It seems that betting on the fact that Goldman Sachs will do the opposite of what it advises its clients to do results in a win. This is unfortunate for the clients not considered “special” by the firm. One could reason that those clients are the ones who get hurt the most by advice such as this because they tend to have less money invested overall, so any hit is proportionately bigger for them.
The two opposing views issued by Goldman allow it to always claim that it is right. Eventually, investors may catch onto this and stop seeking the firm’s advice. It would be interesting to see what would happen to Goldman Sachs if all those non-special clients took their business elsewhere.
Source: Durden, Tyler. Zerohedge. Goldman Tells Its “Special” Clients To Sell Gold Even As It Raises Its Price Target On The Shiny Metal.
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