Goldman Told Clients to Go Long Copper a Day Before Price Plunge

(Bloomberg) – Goldman Sachs Group Inc. The hedge of the hedge funds recommend an increase in US copper prices just one day before the tariff decision in US president Donald Trump, who sends the market more than others.

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In a call with clients on Tuesday, Goldman argued that Trump was likely to go ahead with a 50 % tariff on copper, and he recommended buying short -term call options that would pay if copper prices in the United States rose 11 %, according to people familiar with the matter, who asked not to recognize discussion of private information.

In fact, the US President imposed on Wednesday afternoon a limited tariff that exempted the main form of copper from the duties completely, causing prices to decrease in New York by 22 % within hours.

In that evening, the Goldman commodity sales office sent an email to customers entitled “No copper tariff. Mea Culpa.”

The wrong of one of the largest and most respectable banks in commodities highlights how to almost declare the customs tariffs almost the entire copper market. Separate people are aware of the issue, that many hedge funds and bank trading offices, including Goldman, are nursing losses from the collapse of the price of Wednesday. The low prices doubled the decline in the previous record of the United States in the data dating back to 1988.

Other big banks were similarly, as a sales representative was sent to Citigroup Inc. A message on Wednesday morning to customers who say, “Our commercial office is like buying ARB in copper (Buy Comex, Sell LME).”

On Tuesday, the call was the latest in a series of recommendations that Goldman urged customers to bet on the high prices of American copper. Trump announced in early July that the copper tariff will be 50 % – doubling the market expectations at that time – but US copper prices on Comex rose only to about 28 % of the global prices on the London Metal Stock Exchange.

While some customers are concerned that there may be exemptions for each country separately after the United States signed a commercial deal with Indonesia, a main copper product, Goldman has argued that the spread of the price between the two markets should rise. In a summary of Tuesday’s invitation that was sent via email by Goldman sales representatives to customers, the bank said that “50 % full definitions” should lead to a transfer to 35 % -40 %.