The Real Gold Man at Goldman Sachs: He Called Gold Crash Right ET dt.

19-04-1
WHITNEY MCFERRON & NICHOLAS LARKIN
Goldman Sachss Jeffrey Currie got ahead of golds biggest collapse since 1980 last week
because he saw two signals most others missed !rices that had risen for 1" straight years as
in#estors sought a ha#en asset failed to rally amid turmoil in Cyprus Gold holdings in e$change
traded funds tumbled at a time when interest rates remained low Currie% the banks &'(year(old
global commodities research head with a !h) in economics from the *ni#ersity of Chicago%
issued his sell recommendation on +pril 10% before gold fell 1,- in a two(session plunge that
ended on +pril 1.% the biggest decline in ,, years /organ Stanley and 0ank of +merica
followed Goldman% and the slump wiped out almost 11 billion of hedge fund manager John
!aulsons personal wealth 2ou had a whole group of obser#ations that should ha#e created a
substantial rally in gold prices% but they didnt% Currie said by telephone from 3ew 2ork 4he
fact that gold did not rally on Cyprus amid the bad *S data that occurred in that time period
created the con#iction we needed
C!"r#s $e%!
Gold rose 1- in the week after /arch 1' when Cyprus announced an unprecedented le#y on
bank deposits% before erasing gains the following two weeks 4he countrys finance minister said
on +pril 1& it may sell gold reser#es to get international aid% helping e$tend a slump this week
after the metal fell into a bear market +pril 1" 0ullion capped a record annual run last year as
nations pledged more stimulus to bolster economic growth Currie% who manages a team of 11
research analysts% first cut the banks outlook for gold prices in )ecember% and then again in
5ebruary% before recommending a short position on +pril 10 4he banks 1"(month forecast is for
prices to reach 11%,90 an ounce 4he target for the end of "01& is 11%"60 and prices may drop
below 11%"00 temporarily% he said
&a#lson '#tloo(
Golds price drop hasnt changed billionaire !aulsons intermediate to long(term outlook on the
precious metal% said John 7eade% partner and global strategist at !aulson 8 Co in 3ew 2ork in a
statement on +pril 1.0ond buying by go#ernments will increase demand for gold e#en as the
commodity is going through one of its periodic ad9ustments Curries correct gold
recommendation came as he celebrated his 16th year at Goldman Sachs on +pril 1. :e 9oined
the bank after earning his doctorate from the *ni#ersity of Chicago in 199'% and became a
managing director in "00" and partner in "008 :e mo#ed to the 3ew 2ork office last year from
;ondon% where he worked since "00, and ser#ed as <uropean co(head of economics%
commodities and strategy research from "010 to "01" =n#estors who followed Curries
recommendation on gold would ha#e earned returns of about 1"- not the best call hes e#er
made =n "006% he made a bullish recommendation on oil that yielded ",- 4he price of crude
touched a 19(month low in January "006 in 3ew 2ork before surging to a record 11&6"6 a
barrel in July the ne$t year +nother bullish recommendation on a basket of commodities in "011
yielded ",-% while a bet on higher oil in "01" lost ,'- =n "006% it was much more of a
contrarian call than the recent one% Currie said >e were fighting the tape in the sense that you
had a substantial pullback in commodity prices into the first ?uarter of "006 4his time% if you
look at a chart% gold was trending downward consistently% so this was less of a contrarian call
than ones we#e made in the past >hile futures a#eraged a record 11%'61 last year% prices were
already in a fi#e(month slump through 5ebruary that was the worst since 1996 and a month
before Goldman Sachs ad#ised selling the metal Gold is now "8- below its September "011
record 3ot all of Curries recommended trades are winners 4he bet on higher copper prices that
was recommended on /arch 1 has lost about 1&98 a tonne% according to an +pril 1' report from
the bank
Glo)al Mar(et
Currie% who li#es in 5airfield% Connecticut% said he tra#els 1," days out of the year /embers of
his research team are based in 3ew 2ork% ;ondon% Singapore% :ong @ong and Sydney *nlike
e?uities which are by definition regional% commodities are truly a global market% Currie said
4hats one reason why =m on the road so much% because of that =ts predominantly corporate
players in the market% so =m not going to places like 0oston or Aurich >ere going to places
like ;agos and Johannesburg% as opposed to where the in#estors are 0loomberg
Jeffrey Currie, Global Coo!i"ie# Re#ear$% Hea!, Gol!a& Sa$%#