truthingold.com / By truthing / November 7, 2013 at 10:42
It’s starting to feel like we are part of a giant poker game against the US government, whose hand is the true condition of the American economy.
The government has become so good at bluffing that most people feel compelled to watch how the biggest players in the game react to determine their own investment strategy.
Unfortunately, this past month revealed that even pros like Goldman Sachs have no idea what sort of hand Washington is really hiding.
A week into the government shutdown, Jeffrey Currie, head of commodities research at Goldman Sachs, declared that gold would be a “slam dunk sell” if Washington resolved the budget debate and raised the debt ceiling. The call was based on an underlying narrative that the US economy is experiencing a slow, but inevitable, recovery.
Taking this recovery as a foregone conclusion, conventional Wall Street analysts saw two clear choices for Washington. On the one hand, Congress could reach an agreement, raise the debt ceiling, and allow the recovery to continue. This would allegedly have been the final nail in the coffin of the safe-haven appeal of gold.
On the other hand, if no agreement were reached, the government would have been forced to default on its debt. This would have erased any signs of recovery and sent the economy spiraling back into a terrible recession – while boosting the gold price.