Gold bugs of the world, unite! You have nothing to lose but your exposure to fiat currencies.
Or so says leading hedgie and Wall Street throw back Paul Tudor Jones, who in his latest missive to investors has gone soft at the knees for the yellow metal:
I have never been a gold bug. It is just an asset that, like everything else in life, has is time and place. And now is that time.
Rousing stuff indeed.
The world, according to PTJ, is looking more and more like the 1970s every day — and like many other recent gold converts he fears that countries could be tempted into monetising their mounting global fiscal deficits, thus further destroying the value of paper cash.
As the dollar slowly grinds towards all-time lows, there's been a lot of blustery speech about its fate.
Many economic experts believe this weakness bodes very badly for the country and that government banking authorities should act quickly to prop up the world's most important currency.
Others welcome the slide as an opportunity to boost our economy with rising exports and the chance to repay our growing debts with cheaper dollars tomorrow.
We hadn’t quite appreciated how much of a gold bug CS strategist Andrew Garthwaite is. Turns out he’s smitten, and has been since March 2007.
A 24-page epistle to the investment bank’s clients on Friday set out his case:
1) The real Fed Funds rate looks set to stay below 2%
There’s plenty of history showing how the gold prices rises when Fed Funds is below 2 per cent. Simple as that.
2) BoJ and the ECB could try to cap currency strength
While excess liquidity from QE and other stimulus has puffed up the price of just about everything - including gold - there’s a chance of even more liquidity sloshing round the system if European and Japanese central bankers decide the dollar’s decline has gone far enough.
Gold has confounded expectations by comfortably consolidating above $1,000 an ounce, and traditional buyers in the jewelry market are facing up to the reality that higher prices are here to stay.
It's an attitude that could remove the last hurdle before gold can resume a rally that appears to have hit a roadblock for now.
"I would not advise anyone to short this market," said Jeffrey Rhodes, CEO of INTL Commodities in Dubai. "Indian's will be ready to buy if gold corrects. You might not see gold below $900 again," said Mr. Rhodes.
The people who are telling you to buy gold because of impending hyper-inflation don't know what they're talking about, says "cycles" analyst Charles Nenner.
Yes, gold has done well in times of inflation. But it has also done well in times of deflation. So the causality link between inflation and gold I wildly overblown.
The real reason to own gold, says Nenner, is that there's a war coming. Gold does well in times of military conflict, and we're heading pell-mell into an era of military conflict.
That is the big question on many traders' minds as gold fell from a high around $1,070 to the lows seen earlier today.
In my new video that was shot at noon on Tuesday 10/27, I go into detail on what I think is going to happen to this market. I think you will see a refreshing view of the gold market and also the strategies that we're employing to take advantage of the next big move in gold.
Investors regard gold as a safe-haven asset in uncertain financial times. They hope the precious metal can hold its value when most other financial assets - shares, currencies and property - may not. Earlier this month, gold breached the $1,000 per ounce price level – a key psychological threshold - and last week it set a record high against the dollar. The soaring gold price has mirrored the recent decline in the dollar as international concerns grow about the health of the US economy and questions are raised about the dollar’s future as the world’s major reserve currency.
Not surprisingly, given the dollar's weakness, commodity action has been very positive. Two weeks ago we said that, on the CRB exceeding 271, commodities would become a buy opportunity. As you can see from the latest chart, that occurred. This is a signal of considerable importance and suggests that a long term commodity bull market is now secure. If that turns out to be true, it may be implying an even steeper collapse of the dollar.
There are two significant events this week that could exert pressure for higher gold prices. Because of this, I expect to see major behind-the-scenes actions to try to suppress gold (and silver) prices until the middle of Thursday afternoon. First, the U.S. government’s Treasury debt auctions will sell the greatest amount of debt ever sold in one week. The net debt increase of $153 billion is so high it will exceed the current authorized federal debt limit. Flooding the financial markets with so much debt is a sign of weakness for the U.S. dollar. As the dollars declines in value, the price of gold in U.S. dollars invariably rises.
For nearly two decades, every credit crisis has been palliated with a further wave of leverage, kicking off a new economic cycle. Can this work again? I think not. In this post-credit crisis world, some things will be permanently different.
It will not be business as usual for government bond prices. That is because current bond yields and the increasing insolvency of our rulers are the biggest disconnect in financial markets today. This comes from two factors: quantitative easing by central banks and the collapse of credit demand by the private sector. Neither are permanent features of the economic landscape.
When most people talk about higher gold prices, they typically mention deficits and inflation. But there's a major factor out East that could send gold $200 higher in a hurry: Central bank buying from China and Japan.
Inside this short FT article, Credit Suisse strategist Andrew Garthwaite mentions the super bullish factor of low real interest rates. But Credit Suisse also has this tidbit: China and Japan control 42% of the world's currency reserves… but just 2% of those reserves are in gold. Garthwaite says,
"If the Bank of Japan and Bank of China wanted to hold 10 per cent of their reserves in gold (compared with 70 per cent in Europe and 80 per cent in the US), they would have to buy around $250bn worth of gold, more than double the world's annual gold product
Counterfeiting is a very old trade, it hasn’t gone away and it won’t, pirate movies, fake watches or fake designer handbags and fake coins are all inter-related in this respect. In fact, the Yankees used counterfeiting as a weapon against the Confederates in the American Civil War.
The issue of counterfeit numismatic items produced in China and imported into the United States has become a “hot button” topic the past year.
You can do a few things to protect yourself though here is a list of ‘dos and don’ts’.
Chrystia Freeland, US managing editor, interviewed George Soros, the fund manager, about the state of the world economy, relations between the US and China, his investment performance and regulating bankers' compensation. This is a transcript of that interview.
FT: Thank you for joining us, Mr Soros.
GS: It's a pleasure.
FT: How do you judge the state of the world economy? Has the world recovered from the crisis of 2007/2008?
GS: Well, certainly the financial markets have regained their composure so they're beginning to function again, and also the world economy has overcome the shock that it has suffered because for a while everything froze and now things are moving again. So there is rebound, but I think that the facts of the crisis will take a long tim
This is it. This is your last wake-up call... At a recent breakfast, John Paulson, the most successful speculator of the last 20 years, explained exactly how the great inflation will come to pass. Says Paulson: The banks will resume regular lending – thereby releasing all of the excess money supply into the system – within six to 24 months. Two or three years after that, we will see 12% annual inflation.
Paulson is recommending investing in gold. He's already placed more than $4 billion of his firm's assets in the metal. Why is Paulson building his position so early if he doesn't expect inflation to kick in for four years? Scarcity. Paulson notes, of the $200 trillion of investable assets in the world, only $800 billion is gold. You won't be able to get much of that
Gold attracts conspiracy theories like no other asset. Google "Yamashita's Gold" and enter into a half-plausible thriller of Japanese wartime loot and abandoned bullion in the Philippines. It is the stuff of an airport page-turner but what can it tell us about the real world?
Some serious people think that the recent rally in the gold price really is different this time. It's not like the safe-haven spikes that have pushed the yellow metal through $1,000 an ounce on a handful of recent occasions but each time failed to hold the gain. Traders are pointing to the shallowness of recent pull-backs and the volume of bets buying speculators the right to purchase gold at between $1,100 and $1,200 an ounce.
There are the gold bugs, with their tales of impending economic apocalypse. And then there are people like Martin Murenbeeld, chief economist for Canada-based money manager DundeeWealth. "I'm just an economist who happens to like gold," he says. "I'm not always bullish on it."
Right now Murenbeeld is bullish on gold. He was here at TIME last week, giving me his rundown of reasons. Some of them you've already heard—the dollar is trending downward against the world's other major currencies (which makes the dollar price of gold go up) and efforts by central banks around the world to fend off depression by printing money will probably lead to inflation (which also makes the price of gold go up). But Murenbeeld offered a related reason that I hadn't heard ar
Jeffrey Christian, managing director of CPM Group, says that even though big name investors are buying gold, there is still room for institutional investors to get in on the trade.
This video cannot be embedded, so please click on the link below to view.
While the crowd has been chortling over the anticipated decline and fall of the American Empire, they may also be overlooking the dangerously unstable bubble in China, and the implications for that phenomenon when the global economy shifts again.
There has been little doubt in our minds for a long time that China was in an impressive growth cycle that was fueled by overly cheap money and a spectacular equity bubble. This is why we posted that documentary about the Crash of 1929 yesterday, in commemoration of the 80th anniversary of Black Thursday tomorrow. The collapse of bubbles will not be in the US alone, and the description and atmosphere as described in that film sounds much more like China today than it does the US.
Earlier this month, I received a sobering e-mail from a senior, recently-retired banker. This particular man, a veteran of the credit world, had just chatted with ex-colleagues who are still in the markets – and was feeling deeply shocked.
“Forget about the events of the past 12 months ... the punters are back punting as aggressively as ever,” he wrote. “Highly leveraged short-term trades are back in vogue as players ... jostle to load up on everything from Reits [real estate investment trusts] and commercial property, commodities, emerging markets and regular stocks and bonds.
“Oh, I am sure the banks’ public relations people will talk about the subdued atmosphere in banking, but don’t you believe it,” he continued bitterl
October
30
October
Paul Tudor Jones ♥ gold
Oct 30 2009 The Financial Times
Gold bugs of the world, unite! You have nothing to lose but your exposure to fiat currencies.
Or so says leading hedgie and Wall Street throw back Paul Tudor Jones, who in his latest missive to investors has gone soft at the knees for the yellow metal:
I have never been a gold bug. It is just an asset that, like everything else in life, has is time and place. And now is that time.
Rousing stuff indeed.
The world, according to PTJ, is looking more and more like the 1970s every day — and like many other recent gold converts he fears that countries could be tempted into monetising their mounting global fiscal deficits, thus further destroying the value of paper cash.
Continue Reading
30
October
Decline and fall of the U.S. dollar
Oct 30 2009 MarketWatch
As the dollar slowly grinds towards all-time lows, there's been a lot of blustery speech about its fate.
Many economic experts believe this weakness bodes very badly for the country and that government banking authorities should act quickly to prop up the world's most important currency.
Others welcome the slide as an opportunity to boost our economy with rising exports and the chance to repay our growing debts with cheaper dollars tomorrow.
Continue Reading
30
October
Credit Suisse (still) ♥ gold
Oct 30 2009 The Financial Times
We hadn’t quite appreciated how much of a gold bug CS strategist Andrew Garthwaite is. Turns out he’s smitten, and has been since March 2007.
A 24-page epistle to the investment bank’s clients on Friday set out his case:
1) The real Fed Funds rate looks set to stay below 2%
There’s plenty of history showing how the gold prices rises when Fed Funds is below 2 per cent. Simple as that. 2) BoJ and the ECB could try to cap currency strength
While excess liquidity from QE and other stimulus has puffed up the price of just about everything - including gold - there’s a chance of even more liquidity sloshing round the system if European and Japanese central bankers decide the dollar’s decline has gone far enough.
Continue Reading
30
October
Jewelry Demand to Return Despite Higher Gold Prices
Oct 30 2009 Wall Street Journal
Gold has confounded expectations by comfortably consolidating above $1,000 an ounce, and traditional buyers in the jewelry market are facing up to the reality that higher prices are here to stay.
It's an attitude that could remove the last hurdle before gold can resume a rally that appears to have hit a roadblock for now.
"I would not advise anyone to short this market," said Jeffrey Rhodes, CEO of INTL Commodities in Dubai. "Indian's will be ready to buy if gold corrects. You might not see gold below $900 again," said Mr. Rhodes.
Continue Reading
30
October
Gold's a Great Investment Because There's a War Coming
Oct 30 2009 Yahoo News
The people who are telling you to buy gold because of impending hyper-inflation don't know what they're talking about, says "cycles" analyst Charles Nenner.
Yes, gold has done well in times of inflation. But it has also done well in times of deflation. So the causality link between inflation and gold I wildly overblown.
The real reason to own gold, says Nenner, is that there's a war coming. Gold does well in times of military conflict, and we're heading pell-mell into an era of military conflict.
Continue Reading
29
October
Has the Gold Market Topped Out?
Oct 29 2009 MarketClub
Has the Gold Market Topped Out?
That is the big question on many traders' minds as gold fell from a high around $1,070 to the lows seen earlier today.
In my new video that was shot at noon on Tuesday 10/27, I go into detail on what I think is going to happen to this market. I think you will see a refreshing view of the gold market and also the strategies that we're employing to take advantage of the next big move in gold.
Continue Reading
29
October
Price of Gold
Oct 29 2009 The Irish Times
Investors regard gold as a safe-haven asset in uncertain financial times. They hope the precious metal can hold its value when most other financial assets - shares, currencies and property - may not. Earlier this month, gold breached the $1,000 per ounce price level – a key psychological threshold - and last week it set a record high against the dollar. The soaring gold price has mirrored the recent decline in the dollar as international concerns grow about the health of the US economy and questions are raised about the dollar’s future as the world’s major reserve currency.
Continue Reading
29
October
Months of gains ahead for commodities
Oct 29 2009 MoneyWeek
Not surprisingly, given the dollar's weakness, commodity action has been very positive. Two weeks ago we said that, on the CRB exceeding 271, commodities would become a buy opportunity. As you can see from the latest chart, that occurred. This is a signal of considerable importance and suggests that a long term commodity bull market is now secure. If that turns out to be true, it may be implying an even steeper collapse of the dollar.
Continue Reading
29
October
Gold Blast-Off Starts Friday?
Oct 29 2009 Numismaster
There are two significant events this week that could exert pressure for higher gold prices. Because of this, I expect to see major behind-the-scenes actions to try to suppress gold (and silver) prices until the middle of Thursday afternoon. First, the U.S. government’s Treasury debt auctions will sell the greatest amount of debt ever sold in one week. The net debt increase of $153 billion is so high it will exceed the current authorized federal debt limit. Flooding the financial markets with so much debt is a sign of weakness for the U.S. dollar. As the dollars declines in value, the price of gold in U.S. dollars invariably rises.
Continue Reading
29
October
Why sovereign bond yields will explode
Oct 29 2009 The Financial Times
For nearly two decades, every credit crisis has been palliated with a further wave of leverage, kicking off a new economic cycle. Can this work again? I think not. In this post-credit crisis world, some things will be permanently different.
It will not be business as usual for government bond prices. That is because current bond yields and the increasing insolvency of our rulers are the biggest disconnect in financial markets today. This comes from two factors: quantitative easing by central banks and the collapse of credit demand by the private sector. Neither are permanent features of the economic landscape.
Continue Reading
29
October
These two countries could send gold $200 higher in a hurry
Oct 29 2009 The Daily Crux
When most people talk about higher gold prices, they typically mention deficits and inflation. But there's a major factor out East that could send gold $200 higher in a hurry: Central bank buying from China and Japan.
Inside this short FT article, Credit Suisse strategist Andrew Garthwaite mentions the super bullish factor of low real interest rates. But Credit Suisse also has this tidbit: China and Japan control 42% of the world's currency reserves… but just 2% of those reserves are in gold. Garthwaite says,
"If the Bank of Japan and Bank of China wanted to hold 10 per cent of their reserves in gold (compared with 70 per cent in Europe and 80 per cent in the US), they would have to buy around $250bn worth of gold, more than double the world's annual gold product
Continue Reading
29
October
Avoid counterfeit coins
Oct 29 2009 IMB Blog
Counterfeiting is a very old trade, it hasn’t gone away and it won’t, pirate movies, fake watches or fake designer handbags and fake coins are all inter-related in this respect. In fact, the Yankees used counterfeiting as a weapon against the Confederates in the American Civil War.
The issue of counterfeit numismatic items produced in China and imported into the United States has become a “hot button” topic the past year.
You can do a few things to protect yourself though here is a list of ‘dos and don’ts’.
Continue Reading
28
October
Soros Interview: Move Way from Currencies and into Real Assets and Gold
Oct 28 2009 MSN
Chrystia Freeland, US managing editor, interviewed George Soros, the fund manager, about the state of the world economy, relations between the US and China, his investment performance and regulating bankers' compensation. This is a transcript of that interview.
FT: Thank you for joining us, Mr Soros.
GS: It's a pleasure.
FT: How do you judge the state of the world economy? Has the world recovered from the crisis of 2007/2008?
GS: Well, certainly the financial markets have regained their composure so they're beginning to function again, and also the world economy has overcome the shock that it has suffered because for a while everything froze and now things are moving again. So there is rebound, but I think that the facts of the crisis will take a long tim
Continue Reading
28
October
World’s richest & most successful speculator (Paulson) warns of great inflation
Oct 28 2009 The Daily Crux
This is it. This is your last wake-up call... At a recent breakfast, John Paulson, the most successful speculator of the last 20 years, explained exactly how the great inflation will come to pass. Says Paulson: The banks will resume regular lending – thereby releasing all of the excess money supply into the system – within six to 24 months. Two or three years after that, we will see 12% annual inflation.
Paulson is recommending investing in gold. He's already placed more than $4 billion of his firm's assets in the metal. Why is Paulson building his position so early if he doesn't expect inflation to kick in for four years? Scarcity. Paulson notes, of the $200 trillion of investable assets in the world, only $800 billion is gold. You won't be able to get much of that
Continue Reading
28
October
Gold gives a precious insight into economy
Oct 28 2009 The Telegraph
Gold attracts conspiracy theories like no other asset. Google "Yamashita's Gold" and enter into a half-plausible thriller of Japanese wartime loot and abandoned bullion in the Philippines. It is the stuff of an airport page-turner but what can it tell us about the real world?
Some serious people think that the recent rally in the gold price really is different this time. It's not like the safe-haven spikes that have pushed the yellow metal through $1,000 an ounce on a handful of recent occasions but each time failed to hold the gain. Traders are pointing to the shallowness of recent pull-backs and the volume of bets buying speculators the right to purchase gold at between $1,100 and $1,200 an ounce.
Continue Reading
28
October
The semi-return of the gold standard
Oct 28 2009 Time
There are the gold bugs, with their tales of impending economic apocalypse. And then there are people like Martin Murenbeeld, chief economist for Canada-based money manager DundeeWealth. "I'm just an economist who happens to like gold," he says. "I'm not always bullish on it."
Right now Murenbeeld is bullish on gold. He was here at TIME last week, giving me his rundown of reasons. Some of them you've already heard—the dollar is trending downward against the world's other major currencies (which makes the dollar price of gold go up) and efforts by central banks around the world to fend off depression by printing money will probably lead to inflation (which also makes the price of gold go up). But Murenbeeld offered a related reason that I hadn't heard ar
Continue Reading
27
October
Gartman sees gold becoming world reserve currency
Oct 27 2009 CNBC
Continue Reading
27
October
Follow Einhorn, Buy Gold
Oct 27 2009 Yahoo News
Jeffrey Christian, managing director of CPM Group, says that even though big name investors are buying gold, there is still room for institutional investors to get in on the trade.
This video cannot be embedded, so please click on the link below to view.
Continue Reading
27
October
Of Bubbles and Busts: Which Way for China?
Oct 27 2009 Jesse's Café Américain
While the crowd has been chortling over the anticipated decline and fall of the American Empire, they may also be overlooking the dangerously unstable bubble in China, and the implications for that phenomenon when the global economy shifts again.
There has been little doubt in our minds for a long time that China was in an impressive growth cycle that was fueled by overly cheap money and a spectacular equity bubble. This is why we posted that documentary about the Crash of 1929 yesterday, in commemoration of the 80th anniversary of Black Thursday tomorrow. The collapse of bubbles will not be in the US alone, and the description and atmosphere as described in that film sounds much more like China today than it does the US.
Continue Reading
27
October
Rally fuelled by cheap money brings a sense of foreboding
Oct 27 2009 The Financial Times
Earlier this month, I received a sobering e-mail from a senior, recently-retired banker. This particular man, a veteran of the credit world, had just chatted with ex-colleagues who are still in the markets – and was feeling deeply shocked.
“Forget about the events of the past 12 months ... the punters are back punting as aggressively as ever,” he wrote. “Highly leveraged short-term trades are back in vogue as players ... jostle to load up on everything from Reits [real estate investment trusts] and commercial property, commodities, emerging markets and regular stocks and bonds.
“Oh, I am sure the banks’ public relations people will talk about the subdued atmosphere in banking, but don’t you believe it,” he continued bitterl
Continue Reading