Goldman Sachs has got to be feeling pretty dumb about now.

It was December 4, 2007 when Goldman recommended using a short exposure in gold, expressed in U.S. dollars “to capitalize on a gradual relaxation of credit concerns in the financial sector over the coming months.”

Wow… what a call, Goldman.  Bravo.

As we said that day, the bank expects an easing on the fears that have paralyzed credit markets for the recommendation.  Think about that for a second.  They’re expecting credit market woes to cool in 2008, despite the trillion dollars worth of ARMs resetting over the next year, and despite Fed cut hopes, which will do nothing but temporarily re-inflate a deflating credit bubble.

Here’s how gold prices behaved since then.

That’s almost as good as the wrong-side housing bets.  Thanks, Goldman.  I needed the laugh.