Goldman Pressure on Gold May Be Buying Opportunity


"Gold may have been beaten down without good reason. . ."

The Goldman story is affecting gold, according to 24/7 Wall Street. On Friday, the SPDR Gold Shares (GLD) lost 2.1% to $111.24. The guys at 24/7 reason that the Paulson & Co. hedge fund implicated in the scandal is heavily invested in gold. However, if investors pull out, the fund may need to sell gold to cash them out, putting downward pressure on the yellow metal. I think this argument is a nonstarter. Most hedge funds require 60 to 90 days notice before investors can cash out. So, this selloff won't happen for a while. This means, gold may have been beaten down without good reason, and that Monday is a buying opportunity.

Meanwhile, The New York Times said Saturday that Wall Street firms tend to settle cases like this one, but Goldman's statement on Friday that it intends to fight may create a big problem. While the refusal to settle was intended to discourage investor lawsuits, this could set Goldman up for a long, messy public battle. The paper added that several European banks that lost money in the deal may try to recoup the money from Goldman.

Then Sunday, the Times added two congressmen want a deeper investigation into taxpayer losses while Britain's prime minister asked his country's securities regulator to investigate Goldman due to losses incurred by the Royal Bank of Scotland. Germany added it may take legal action as well.

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