Why Goldman's (NYSE:GS) "Conflicting Gold Advice" is Irrelevant

Some people obsessed with Goldman Sachs (NYSE:GS) have nothing better to do than attempt to dig up dirt to portray them in a negative light, and in some cases that is well-deserved, but the recent faux scandal, where they're accused of offering conflicting gold advice to clients based on their wealth is an exercise in ignorance concerning the overall money-management sector and how it has always operated.

Of course clients are offered differing advice in general, as everyone has completely different risk and comfort levels, as well as goals.

The gist of the story is Goldman advised wealthy clients they the possibility of deflation makes it better to get rid of gold, while telling people with less net worth that the price of gold could rise as high as $1,300 over the next six months.

The highly unlikely deflationary scenario was a reference to the Federal Reserve standing back, along with other central banks, and staying on the sidelines in the current economic conditions.

Goldman said, "We see gold as being vulnerable to central bank inactivity in the face of rising deflation risk."

What is going on here, is high-net-worth clients are always more concerned about preservation of principle than those with lower net worth.

So any threat or possibility of losing money is part of the strategy of managing their accounts. Others aren't so worried about that, as they're willing to take more risk in order to build their net worth, as it's not to the level of their goals.

With that in mind, this isn't contradictory whatsoever, but laying out possibilities to two completely different mindsets and goals of people and institutions with different financial strategies.

Strategies of preservation deal with protection, while strategies of growth deal with more risk. It's not exactly rocket science, and only the clueless and those outside the financial management industry could make the silly, unwarranted and ignorant statements made in this case.

Goldman may deserve castigation in a number of areas, but this is one which reveals the writer has no idea of how the industry works, and makes him and his media outlet look stupid.