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Sssssh. Don’t talk about trading.

The first quarter results released Tuesday by Goldman Sachs showed a 21 percent drop in net earnings from the year earlier—from $3.46 billion to $2.74 billion.

But the drop was less than Wall Street’s analysts expected—thanks in large part to strong results in bond and stock trading.

But far from crowing about its trading prowess, Goldman

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[GS  Loading...      ()   ] is keeping this fact very quiet. So quiet, actually, that the word “trading” doesn’t appear at all in its press release or accompanying materials.

Last year, Goldman’s quarterly results mentioned “trading” 9 times.

Back in 2006, trading was used 11 times in one quarter. Now the word has been vanquished.

This strange new silence might be an attempt by Goldman to at least appear to be complying with so-called "Volcker Rule" limits on the firm’s proprietary trading that were included in the Dodd-Frank financial reform law.

But just because Goldman is not talking about trading, doesn't mean it is not trading.

Goldman’s equities traders brought in $1.054 billion in the first three months of the year, compared with just $847 million over the same period last year. That’s a whopping 24 percent growth of revenues.

The bond traders staged a dramatic recovery from the last quarter, when they brought in just $537 million of revenue. This quarter they garnered $1.024 billion—a 91 percent jump.

This boom in trading revenues is especially surprising because the first quarter of 2011 has been described by most market watchers as a “difficult” one for traders. Citigroup, Bank of America, and JP Morgan Chase all pointed to a tough trading environment.

Goldman—again—somehow—seems to have outsmarted the rest of Wall Street.

Many in the financial media have missed the booming trading. “Weak trading saps Goldman results,” a headline on the BBC read.

It was easy to miss because Goldman scrapped its business structure this year following the completion of its 8-month internal study of its business practices. Gone is the old category of “Trading and Principal Investment”—which once housed both client and proprietary trading. Now that is divided into two divisions—“Institutional Client Services” and “Investing and Lending.”

Institutional Client Services is where Goldman does its market making for clients. It is made up of both the market making activity once counted under Fixed Income, Currencies and Commodities and those under Securities Services. This division did indeed see revenue losses compared to a year ago due to lower trading volumes on behalf of clients—a drop of 28 percent for bonds, commodities and currencies, and 24 percent for stocks.

But both client bond-commodities-currencies and stock trading was up from the particularly ugly third quarter. Perhaps due to volatile commodities markets, income from market making for that section was up a stunning 164 percent from last quarter. Equities market making rose 24 percent from the first quarter.

It’s the “Investing & Lending” section, however, where Goldman’s in-house market expertise really shines. This is where the prop traders who dare not speak their names now reside. Overall, the hidden traders at Goldman saw revenue grow 36 percent from last quarter, and 37 percent from the first quarter of 2010.

Just don’t call them traders, OK?

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