Nothing To Fear But Goldman Recommendations To Short Gold, As Gold Surges

Three days ago, we reported that just days after Goldman's technical team told clients that Gold May Soar "Much Higher Over Time", Goldman's head of commodities released a note, titled appropriately enough "Nothing to Fear but Fear Itself", urging clients to short gold

In a section, titled "time to sell the fear barometer, Currie said the following:

"this past week fears over oil and China were augmented with fears over negative interest rates and the potential for systemic risks from banks. These fears created a surge in gold, the barometer of fear, towards $1300/toz. However, we believe that these fears ignore the facts that systemic risks from oil, China and negative rates are very unlikely.

As a result, he made the following trade recommendation:

As we maintain our view of rising US rates and hence lower gold prices with a 3-month target of $1100/toz and 12-month target of $1000/toz, we are recommending shorting gold through a GSCI-style rolling index. Ironically, gold has a negative yield and such a short would create a positive carry in a world concerned about negative interest rates that made gold rise in the first place.

As it turns out, Goldman clients had nothing to fear but yet another trade recommendation from Goldman, because while gold tumbled after Goldman's "going much higher" reco, it has proceeded to surge since Currie flip-flopped with its Monday recommendation to short gold.

Here is the result of Goldman's foray into daytrading gold - one could say Goldman has gone "full Gartman."

Which brings us to Currie's poetic conclusion:

We believe that the sharp rise in gold prices this past week was mostly due to concerns over systemic risks, particularly in the banking sector, given the sharp correlation of gold prices with bank stocks and other measures of systemic credit risks.

We wonder, then, looking at today's dramatic surge in gold back to the $1,235 level, are "systemic risk" back on the table?