Thursday, September 1, 2011

Goldman Secret Report: How to Profit from a Financial World on the Brink

Goldman Sachs has published a semi-secret 54-page report for hedge-fund clients. The report has not been issued to the general public. As Business Insider reports this means:
It's an unofficial Goldman research report--the kind you really want to read.
This non-published report, however, is available for all of us to read thanks to the intrepid reporting of WSJ reporters Susan Pulliam and Liz Rappaport.It's a gem. They really think the world is coming to an end. For example, in their public reports, they diss the Swiss fanc. In this private report, they tell hedge funds to buy the Swiss franc as protection. Among the points made in the report as broken down by BI:

In the report, Goldman strategist Alan Brazil argues that:

European banks need $1 trillion of capital (bailout)...
China's growth is probably not sustainable
Solving a debt problem (ours) with more debt doesn't work
He also recommends ways to "play" this debacle:

Buy a six-month put option on the Euro versus the Swiss Franc, thus betting the Euro will drop against the Franc (the Franc being the currency that an official Goldman report recently referred to as the most overvalued in the world)
Buy a five-year credit default swap on an index of European corporate debt--the iTraxx 9. This is a bet that some of these companies will default, and your insurance policy, the CDS, will pay off.


  1. Anyone out there have a link to read this report?

  2. Banks needing capital, China growth not sustainable, etc. makes sense.

    The recommendations on how to play are 'too cute,' in my mind. If, indeed, they think the world is coming to an end, betting on payoffs from counterparties behind puts and CDSs seems mighty risky. The counterparties to those bets are oftentimes the banks that indeed need capital.

    I do think the world is coming to an end (financial restart). I have 90% of my net worth in gold and silver bullion in a single location, 200 year old Swiss bank that, unlike GS/JPM/MS, does not make bets for its own account. I think my approach is a much safer one. I also think it will be more profitable.

    Another good alternative, I think, is, where I have 'transaction' silver.

  3. Here's my take:

    Goldman's "secret" report was intended to be public and is the reverse of good sense.

    Buy Franc? Dollar is a better buy at this level, even if it sinks farther. It will go up. It's massively undervalued.

    Sell franc and move to gold, like Celente said just recently. Or stay in cash and wait to buy gold when it corrects to 1400 or lower.

    Franc is grossly overvalued now, and the central bank will cut it back.

  4. I don't buy it that this report is "private". I too think this is a public report labelled as "private".

    European banks need $1 trillion of capital (bailout)...

    Duh. But secret?

    China's growth is probably not sustainable


    Solving a debt problem (ours) with more debt doesn't work

    You see, these can't be "private", because they are what everyone knows anyway.

    I'm with anonymous, I suspect Goldman "leaked" this report as disinformation.

  5. @Major-Freedom,

    The PE hang out in Switzerland, where their money is safe. Pumping CHF at these levels helps them, because they are selling after a nice ride up! Maybe they are buying $ now, while the suckers are jumping out of it.

    Meanwhile, pumping CHF also keeps gold under control.

  6. As mentioned, the S&P500 big picture remains bearish and the March 2009 lows will be breached.

    FX medium to long term outlook has not changed ~ Euro bearish and USD bullish.

    As warned about for some time ~ bring on the OVERDUE USD rally.


  7. 'As warned about for some time ~ bring on the OVERDUE USD rally.'

    We'll have to see if Bernanke prints more money or not. ;)

  8. Seems to me that betting on which counterfeiter out-prints another is just a stupid game for a county fair.

  9. It seems to me that all the macro factors are real, and will have negative effects, some perhaps dire. If the Fed decides on QE3, will that lift the ailing Euro, against the dollar at least. Will they both fall together against other currencies, and as in the past precious metals? But more importantly for trading, over what time scale? As so much of this has no precedant, the only thing certain is lots of uncertainty!

  10. Just another attempt by GS to manipulate the market for its own benefit.
    Be the contrarian ..."Contrarian"
    Information leaked is not "unknown"....!!
    Some degree of certainty does exist.
    ..More fiat money printing
    ..Higher PM's
    ..More debt burden
    ..higher taxes
    ..more inflation
    ..more unemployment
    The play is not the USD (although ST it could bounce). CHF, CAD, AUD, SGD, NZD are the place to be.
    Because of the money printing and debt levels, AU & AG need to go much higher. Mention of a AU 1400 are ludicrous.
    China will slow down, but at least ASIA will not require life support. EUR and USA WILL !!

  11. How can this be "disinformation" from GS if it's all true. Doesn't disinformation have to be a lie to be of any value to those who are hiding the truth?
    I suspect the public reports that come from GS are the real BS disinformation.

  12. Good luck waiting for gold at 1400! Could happen of course. Meanwhile be long when gold is strong, out when gold is weak. Just now, it happens to be strong... Euro worries? CHF may again appreciate, but SNB is putting the brakes on. So why not AUX/EUR and AGX/EUR?