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TheStreet Open House

5 Dumbest Things on Wall Street This Week: April 19

Stocks in this article: CXWHLFCCL

3. Gold Bulls Gored

Sometimes market participants voluntarily say silly things or make dumb moves. Other times -- like this week -- the market's unforgiving uncertainty simply makes them feel dumb.

Yep, gold bugs, we're talking about you. You've had a nice decade-long run, so suck it up.

The yellow metal was suddenly and unexpectedly shellacked Monday, sending panicked gold investors scurrying. Gold for June delivery on the COMEX dropped $140.30, or 9.3%, to $1,361 an ounce, marking the largest percentage drop in gold since Feb. 28, 1983, when the price dropped 12.1%.

"You had a perfect storm of circumstances prevailing: you had technical chart patterns being broken, you had the Cyprus situation, you have the GDP in China, you had the backwardations in crude oil beginning to narrow dramatically . . . you have a new crop of corn that looks like it's going to be sizable being planted," Dennis Gartman, editor of The Gartman Letter, told TheStreet.

In your face gold bugs! You got creamed by corn! What's next, getting bitchslapped by Bitcoins?

Furthermore, it's not like you weren't warned. Goldman Sachs (GS), the gold-standard of investment banks mind you, lowered its gold price forecast last Wednesday before the deluge. Goldman lowered its average 2013 gold price forecast to $1,545 an ounce from $1,610 an ounce, and reduced its 2014 average target to $1,350 an ounce from $1,490 an ounce.

Nicely done Goldie! If only you served up the same prescient "sell" calls on eToys and your other crappy internet IPOs, not to mention your homemade toxic mortgage bonds, then maybe you wouldn't find yourself spending so much time looking up Sen. Carl Levin's (D., Mich) nostrils during Congressional hearings. Don't you think?

Anyway, speaking of toxic mortgage bonds, Paulson & Co.'s John Reade said in a statement that it established its gold position in April 2009 at an average cost of $950 an ounce and was continuing to hold the metal. John Paulson, if you remember, made billions shorting faulty mortgage bonds in the so-called "greatest trade ever" and subsequently plowed much of those winnings into gold.

"While gold can be volatile in the short term, and is going through one of its periodic adjustments, we believe the long term trend of increasing demand for gold in lieu of paper is intact," added Reade.

"Periodic adjustments"? Are you serious, man?

This was no regularly scheduled chiropractic appointment. There was no minor back-cracking here. This was a complete and utter spine-crushing selloff.

The kind where so-called brilliant hedge fund managers appear stunningly stupid -- like the rest of us -- because they haven't been tipped off by their literally "fabulous" Goldman brokers.

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