Goldman Sachs' alleged fraud stirred up a thousand waves. After a German bank lost money by investing in the investment instruments involved, and the government claimed that it would study whether to sue Goldman Sachs, Britain also indicated that it was investigating whether the London branch of Goldman Sachs had engaged in fraud similar to the US headquarters.
In Britain, Prime Minister Gordon Brown was shocked by Goldman Sachs' accusation and pointed out that this incident showed that the banking industry had "moral bankruptcy". He asked the Financial Services Regulatory Authority (FSA) to investigate. The FSA is in contact with the US Securities and Exchange Commission (SEC) on the alleged fraud of Goldman Sachs to study whether the London branch of Goldman Sachs has conducted any transactions similar to this alleged incident.
ABN· Amro, a subsidiary of Royal Bank of Scotland (RBS), once invested in the investment tools involved in the Goldman Sachs fraud, and lost $840 million, which was the biggest loss. Now, Royal Bank of Scotland is considering suing Goldman Sachs.
Affected by this incident, the share price of Goldman Sachs fell 13% on April 6, and closed at 160.7 USD. Other financial stocks were also dragged down. Since the beginning of this year, financial stocks have been the best performing industry, but affected by the incident, they have now fallen to the third place, and the increase rate has dropped from 18% to 13.5%. As a venture capital, the rise and fall of the stock market is a weather vane. The impact of the Goldman Sachs incident will drag down the stock market crash, hit the confidence of market investors, and thus cool the market risk appetite. If market risk aversion heats up, gold, as a venture capital product, will also be dragged down and fall. This is also the reason why gold plummeted by $25 after the outbreak of Goldman Sachs.
On the other hand, if the Goldman Sachs incident further affects the market, the risk appetite will not only cool down, but also the risk aversion will rise, then the market confidence dampened by the Goldman Sachs incident will be transformed into the result of prompting market investors to buy gold to hedge. This is also the other side.