Goldman Sachs is Scared

Brian Hicks

Updated September 9, 2011

This 335-point drop is really no surprise…

As we said just the other day:

We’re falling off a cliff.  Housing is still crumbling.  Jobs creation is circling the drain.  Europe is on the teetering on the brink of insanity.  Gold is racing to $2,000.  Silver is running to $50.  And the “recovery” we were promised in the second half of this very year looks to be nothing more than a pipe dream…

Maybe the world really is coming to an end, as detailed here.

But there is a silver lining, which I’ll discuss below… 

By Goldman’s doomsday accounts in their “secret” 54-page report (“only” meant for institutional eyes), European banks need $1 trillion of capital.  China’s growth is not sustainable.  And solving a debt problem (ours) with more debt doesn’t work.

Think about that…

A top Goldman analyst is telling its clients that, “solving a debt problem with more debt has not solved the underlying problem.  In the US, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth.  Can the US continue to depreciate the world’s base currency?”

That’s some scary stuff.

The report goes on to talk about how the euro is headed for troubles… and how European banks are headed for doomsday. 

We really are headed for a global economic meltdown…  and that’s because US debt is not sustainable.  Europe is on the brink. But you won’t hear that from the mainstream “everything is fine” press.

The only reason we haven’t collapsed… yet is because of this debt-fueled fantasy we’ve been living. 

But the crash is coming.  You just need to be prepared for it.  Even Goldman Sachs is telling the public… err… its clients to be prepared.

There’s nothing the government, the President, the Fed, or any one else can do.  Worse:

  • There’s a good chance of recession… (we’re likely there).
  • Credit markets are drying up like they did in 2008.
  • Consumer confidence is tumbling.
  • Anti-bailout hysteria is sweeping Germany… an
  • The global banking system has two trillion dollars of exposure to Greek, Irish, Spanish and Italian debt.
  • Housing is a mess.

But the absolute worst thing you can do is panic.  The worst. 

Buy gold.  Buy silver.  Buy Treasuries.  Short the banks.  Short the indexes.  And short the dollar.  The silver lining to all this… My options team flourishes in these bearish environments.

Options Trading Pit just went 18 for 19 in the worst trading month of 2011.  This is the same team that called the end of Bear Stearns, Lehman, the top of the housing debacle, the crash to 6,500, and so much more…

And we’re telling investors the same thing we’ve been telling them since 2007’s subprime headache, do not panic.  Have a plan in place.  Know where and how to invest properly.  And invest with options and metals, as we’re doing in Options Trading Pit (with a recent 18 for 19 run) and Pure Asset Trader (just wrapped up two 40-for-40 win runs).

Panicking, and racing to sell off your investments, won’t help make any returns.  Being patient.  Investing smart.  And having a plan does. 

Stick with us during these tough times, as you have in the past.  We’ll get through what’s coming together… with our pockets loaded with green.

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