Goldman Sachs and Gold

One of the largest investment banks in the world, founded in 1869 in New York. A primary dealer in the United States Treasury security market, which has revolving door relationship with the U.S. government. It’s believed by many to be the world’s most evil investment bank, which faces many controversies and legal issues. Goldman Sachs. The bank that allegedly runs the world and whose tentacles squeeze the globe. Let’s analyze its link with gold – and whether its collapse is coming, which some analyst are afraid of.

Goldman Sachs Collapse and Gold

How possible is that Goldman Sachs collapses? It’s a difficult question, since bank’s activities are vague and blurry. Let’s look at the chart below.

Chart 1: The quote of Goldman Sachs’ shares listed on NYSE from 2008 to 2018.

The quote of Goldman Sachs’ shares listed on NYSE from 2008 to 2018

As you can see, the shares of Goldman Sachs significantly rebounded from levels seen during the Lehman Brothers’ debacle. They are up almost 200 percent from the low in 2008 and down about 90 percent from the all-time high in 2007. And the bank’s price to book value is 1.2, which seems to be healthy. Well, compared to the Deutsche Bank, Goldman Sachs looks excellent and is not likely to fall in the near future. American banks generally coped with the Great Recession better than their European peers. Trump’s deregulation of the financial sector will only help American banks, including the Goldman Sachs.

Hence, Goldman Sachs is a rather poor candidate for the next Lehman Brothers. Its fundamentals do not look scary, and it is unlikely that the U.S. government, where so many formed Goldman Sachs’ employees work, would allow for its bankruptcy. We believe that gold bulls should not count on that. However, investors should take all such predictions with a pinch of salt, as the future is uncertain. The same applies to Goldman Sachs’s forecasts – as a reminder, in 2008, when investors should have been buying gold as crazy, the bank predicted gold prices would fall…