If I were to try "reading Goldman's mind" on gold, I'd say they're making a six-month bet, expecting a Y2K panic to trigger a flight to gold and result in a short squeeze. If not Y2K, how about (take your pick) China-Taiwan, Chinese devaluation and resulting currency crises, India-Pakistan, Russia, failed hedge fund, interest rates, etc., etc.? I think Goldman figures something big will go wrong in the near term, so they might as well corner the gold market and just wait.
A diehard gold conspiracy theorist could also take Goldman's aggressiveness on gold as a sign that they have the CBs under control. Assuming a crisis does emerge at some point, and that this crisis does lead to a gold-buying panic, the primary risk factor they face is CBs dumping metal on the market to suppress runaway prices. One might wonder whether Goldman would accumulate such a large bullish position unless they had some assurance that the central bankers wouldn't job the market.
Who knows? I currently hold small positions in a few blue-chip miners as a play on seasonal weakness and a possible Y2K scare; I'm planning to hold these for 3-6 months. |
