| | i fear the gold vs paper struggle, at an intense tempo, shall be with us for some time, say 7-15 years
From: J
Sent: Fri, July 22, 2011 2:30:39 PM
Subject: Re: Economist predicts gold falls
everything the economist wrote since 1999 mentioning "gold" can be found here economist.com
i have not read them all, but all that i read over the years in that rag are slightly wrong to deadly wrong
Re the unsigned puff piece on gold in the economist
"Although we feel that investors, for the most part, are holding gold in fear of bad events in the global economy, gold is also often held as a hedge against inflation. Our view is that the prospects of a sustained rise in inflation in the developed world are minimal unless there is a vigorous recovery, but the extraordinary monetary policy actions taken by Western central banks, particularly the US Federal Reserve, have stoked fears that a period of high inflation is imminent, regardless of other developments. More plausible is the danger that the high indebtedness of governments might create the temptation for central banks to allow a period of high inflation later in the recovery, in order to inflate away those debts."
the magazine editors chose words and sentence structure astutely, showing their true evil nature (not surprising)
... the correct and sincere sentence structure would read "investors do not hold gold simply because of inflation or deflation. to put it another way, investors hold gold against inflation and deflation, specifically against governments that interfere in the free market."
the economist cretins are (i) taking inflation as rise in prices, even as the morons (ii) talk about inflation, implicitly, as QEs. which is it? inflation has been happening by fiat / debt money channel since 1982 as interest rate started to drop, and we are living the consequences.
we hold gold in anticipation of natural deflation because we know that the govts wish to counter what is natural.
we hold gold in anticipation of unnatural inflation as long as the authorities are fanning it instead of dousing it.
A correction awaits
Although the reasons are clear for the rise in the price of gold over the past few years, we believe that it is nearing its peak. We expect the US to reach a deal that avoids default before the August 2nd deadline, and it is probable that European leaders will patch over the latest cracks in the euro zone, averting disaster, if not providing a real solution. The US economic recovery is also expected to regain some momentum in the second half of the year, and Japan is already returning to something approaching normalcy following its crippling natural disaster in March. These factors should boost investor confidence and push down the price of gold. In the medium term, official interest rates are likely to rise, driving up returns on a range of assets and raising the opportunity cost of holding gold.
We expect the price of gold to average US$1,390/troy oz in the fourth quarter of 2011 and to fall to US$1,000/troy oz by mid-2013. But this forecast is based on our central assumptions, and it is important to remember that the reason gold is expensive right now is that the risks to those assumptions are unusually high.
problems and issues
(i) usa avoiding default is a reason to buy more gold, not less, and certainly not to sell
(ii) europe patching successfully gives us time to getmoregold
(iii) there will not be any usa economic recovery in real (gold) terms
(iv) official interest rate rising does crap-all, as long as the rate is negative, steady or widening
(v) also, gold is international, universal, eternal, and what happens or doesn't happen in oecd nations is just a fraction of the equation, especially in so far as paper gold trade is concerned
(vi) what happens and doesn't happen in chindia is more important, especially to the physical gold market
at the end of the sorry tale, physical market shall rule over the paper market
From: J
Sent: Fri, July 22, 2011 2:00:47 PM
Subject: Re: Economist predicts gold falls
there is no correct price for gold
it can be anything between zero and ____.
because it is useless relative to overhang of supply, say 60,000 tons recoverable and annual electronics use of nothing dot nothing.
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From: W
Sent: Fri, July 22, 2011 1:54:32 PM
Subject: Economist predicts gold falls
[font=verdana, arial, sans-serif]"We expect the price of gold to average US$1,390/troy oz in the fourth quarter of 2011 and to fall to US$1,000/troy oz by mid-2013."[/font]
I find the article lacking any data to make this prediction.
-w
viewswire.eiu.com
Sent from my iPad
From: J
Sent: Thu, July 21, 2011 3:51:29 PM
Subject: Re: silver, gold, and platinum; campaigns, wars and history
Whenever I wish to buy something for the longer term, almost always the case, I usually start by selling puts, to 1/4 to 1/2 of intended holdings, calibrated.
Once I am put, if price close enough to what I was put at, I turn right around to sell covered calls n depending on what I see n how I feel, sell more puts.
Once I am fully allocated, I continue to sell covered calls n puts, by 1/3 to 1/2 of holdings, depending, and likely spread along the expiration time scale.
It is a fun exercise, especially as one must watch the basket, and as long as one is in a secular bull market. This is the crucial point for cloud ATM extraction, combining fun, cap gains, n current income.
The strong candidates are:
Gdx, paas,
Other objects of desire:
remx, nly, and maybe mcd.
Fcx, Abx clf are ok to an extent.
These cloud-ATM plays are like dependable ex-girlfriends, always open for repeat visits, down, up, n sideways ;0)
Notice I rarely sell puts on gld n slv, as with the paper gold n silver n platinum, I tend to risk on / risk off in wallop strengths, because they are money. I do most of paper metal trades with the banks n not via brokers.
Take away point, pissing against gold is pissing uphill n against the wind, very harsh, almost pointless.
1999 Dec 31st USD 288/oz
2000 Dec 29th USD 274/oz -6%
2001 Dec 31st USD 279/oz +3%
2002 Dec 31st USD 348/oz +25%
2003 Dec 31st USD 416/oz +20%
2004 Dec 31st USD 438/oz +5%
2005 Dec 30th USD 519/oz +18%
2006 Dec 29th USD 638/oz +24%
2007 Dec 31st USD 833/oz +31%
2008 Dec 31st USD 889/oz +7%
2009 Dec 31st USD 1,095 +23%
2010 Dec 31st USD 1,421 +30%
2011 July 21st usd 1,600 +12%
Sent from my iPad
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On 20 Jul, 2011, at 11:08 PM, W wrote:
I’m afraid that I may not be long enough silver.
Today, post our agreement at ic mtg
1. Sold ___ puts on slv jan 2012 to complement my earlier positions
2. Bot ___ shares of tip. Sold and sold ___ puts on tip sep 2011 at 110 strike (this was particularly lucky as tip fell by -.5%
3. Sold ___ puts on nly; sold ___ puts on gld – swb keeps saying buy
I like adding to slv below $40.. I don’t want to be in a regret position of not having enough slv when it goes to 45 which makes my buy decision more difficult then.
From: J
Sent: Wednesday, July 20, 2011 1:11 PM
Subject: silver, gold, and platinum; campaigns, wars and history
cheers, tobagojack
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On 20 Jul, 2011, at 4:34 AM, W wrote:
>
>
> -----Original Message-----
> From:
> Sent: Monday, July 18, 2011 9:15 PM
> Subject: FW: (BN) Soros’s Quantum Holding 75% Cash Leads Hedge Funds Cutting Risk
>
> Mr risk!risk off!
>
>
> Soros’s Quantum Holding 75% Cash Leads Hedge Funds Cutting Risk
> 2011-07-19 04:00:01.5 GMT
>
>
> By Saijel Kishan and Katherine Burton
> July 19 (Bloomberg) -- Keith Anderson, who runs the $25.5
> billion Quantum Endowment Fund for Soros Fund Management LLC,
> has seen enough of choppy global markets.
> In mid-June, Anderson told his portfolio managers to pull
> back on trades as the hedge fund’s losses hit 6 percent for the
> year, according to two people familiar with the New York-based
> firm. As a result, the fund is about 75 percent in cash as it
> waits for better opportunities, said the people, who asked not
> to be identified because the firm is private.
> Soros and Moore Capital Management LLC are among hedge
> funds that have reduced the amount of money they’re investing in
> stock, bond and currency markets as they look for clarity on
> global events ranging from the debt crisis in Europe to China’s
> efforts to control inflation to the debate over the U.S. debt
> ceiling. About 18 percent of asset allocators, including hedge
> funds, are overweight cash, the highest level in a year and up
> from 6 percent in May, a Bank of America Corp. survey showed
> last month.
> Even Anderson’s boss, billionaire George Soros, who made $1
> billion betting against the British pound in 1992, is perplexed.
> “I find the current situation much more baffling and much
> less predictable than I did at the time of the height of the
> financial crisis,” Soros, 80, said in April at a conference at
> Bretton Woods organized by his Institute for New Economic
> Thinking. “The markets are inherently unstable. There is no
> immediate collapse, nor no immediate solution.”
> Louis Bacon’s Moore Capital, with $15 billion in assets,
> cut risk as its flagship Moore Global hedge fund dropped 6
> percent this year through June 30, with all the declines coming
> in May and June, according to investors who asked not to be
> named because the New York-based fund is private. Spokesmen for
> Soros and Moore declined to comment.
>
> Overweight Cash
>
> Funds such as Moore’s and Soros’s, which chase
> macroeconomic trends by buying stocks, bonds, currencies and
> commodities, have been the worst performing hedge-fund strategy
> this year. They fell 2.25 percent through June 30, according to
> Chicago-based Hedge Fund Research Inc., as managers made losing
> bets that the euro would fall against the dollar and that the
> yield on U.S. Treasuries would rise. Some managers also got
> caught when prices for oil and other commodities dropped in May.
> The biggest macroeconomic managers aren’t the only ones
> hesitant to make large wagers. The proportion of asset
> allocators, including hedge funds, with lower-than-average risk
> across their portfolios jumped to a net 26 percent in June from
> a net 15 percent in May, according to the survey by Charlotte,
> North Carolina-based Bank of America.
>
> Tricky Markets
>
> The aversion to risk is reflected in trading volumes.
> Trading in the 50 companies in Goldman Sachs Group Inc.’s index
> of stocks most commonly owned by hedge funds fell to 4.11
> billion shares in June, the lowest monthly level since August
> 2008, according to data compiled by Bloomberg.
> Part of the uncertainty stems from the fact that so much of
> what happens in global markets is dependent on government
> actions, which can distort prices and affect supplies.
> “Most of our funds are in an uncomfortable position in
> that the fundamentals are bearish, but the governments are
> intervening,” said Harold Yoon, chief investment officer at
> Hong Kong-based SAIL Advisors Ltd., which invests in hedge funds
> on behalf of clients. “Instead, managers have focused on
> tactical trading; shorting when markets are getting bullish and
> then covering into panic-driven selling.”
> Short sellers borrow stocks and sell them in hope of
> profiting by repurchasing the securities later at a lower price
> and returning them to the holder.
>
> ‘A Temporary Respite’
>
> In Europe, the debt of Ireland, Portugal and Greece has
> been downgraded to junk as the countries struggle to balance
> budgets and remain solvent. While Greece won a reprieve last
> month with 12 billion euros ($16.9 billion) in aid in exchange
> for austerity measures, European finance ministers have failed
> to present a solution to the debt crisis that’s threatening to
> spread to Italy, the euro zone’s third-biggest economy.
> “While we’ve had a temporary respite on Greece, the
> problem hasn’t been eradicated and there’s potential for more
> negative surprises as the Greek plans are implemented,” said
> Bruno Usai, who co-runs the $1.2 billion Pelagus Capital hedge
> fund at London-based Mako Investment Managers LLP. “It will
> take some time, possibly until the end of the year, before we
> see a full recovery of risk appetite” among money managers.
> In China, the world’s third-largest economy, the government
> is struggling to contain inflation, curb lending and keep the
> real estate market from overheating. China’s gross domestic
> product grew at a 9.5 percent annual rate in the second quarter,
> the slowest pace in almost two years. Consumer prices climbed
> 6.4 percent in June from a year ago, the most since 2008,
> government data released July 9 show.
>
> End in Sight
>
> In the U.S., investors are watching Republicans and
> Democrats battle over whether they will cut the deficit or
> figure out a way to raise the $14.3 trillion debt ceiling before
> the government’s borrowing authority expires on Aug. 2.
> Federal Reserve Chairman Ben S. Bernanke told the House
> Financial Services Committee on July 13 that a failure by
> Congress to raise the nation’s debt limit would lead to a
> “major crisis” and send “shock waves” through the financial
> system.
> Harry Lengsfield, co-founder of KLS Diversified Asset
> Management, said he’s been cutting back risk since mid-May,
> adding that he’s optimistic that things will become clearer
> soon.
> “While de-risking was the right thing to do, we’re getting
> close to the end now,” said Lengsfield, whose New York-based
> hedge fund manages $900 million. “We’ve seen a significant
> widening of spreads, which throws up a number of good
> opportunities over the coming weeks.”
>
> ‘Big Moves Developing’
>
> This time last year, hedge funds curbed trading for some of
> the same reasons they’re hesitant this year, mainly uncertainty
> over the health of Greece and other European countries and the
> ability of China to continue to grow while controlling
> inflation.
> It was only in late August, when the Federal Reserve said
> it would start buying $600 billion in U.S. Treasuries -- the
> second round of quantitative easing that became known as QE2 --
> that funds starting taking on risk again.
> This year, so-called macro managers have been forced to
> make short-term wagers because the longer-term thematic trades
> haven’t worked for them, Mark Enman, head of the global-trading
> team within hedge-fund research at Man Investments in New York,
> said in a telephone interview.
>
> China Question
>
> “But we could be close to something happening,” said
> Enman, whose firm farms out money to hedge funds. “If issues
> like the debt ceiling in the U.S. and European debt crisis are
> resolved, you could see big moves over a short period of time.”
> A number of events could trigger the big market moves that
> hedge fund managers love, traders and investors say.
> “It’s conceivable that if Greece were to default, that
> would spark a rally in the markets,” said Sander Gerber,
> founder of Hudson Bay Capital Management LP, a $1 billion
> multistrategy hedge fund in New York. “Often, disasters mark
> the bottom.”
> Robert Gibbins, chief investment officer of Autonomy
> Capital Research LLP, a $2 billion hedge fund based in New York,
> said he’s looking at three big questions this year, all of which
> he expects to be answered soon.
> The first is whether China can make the transition from
> investment-led growth to consumer-led growth. If consumer
> spending doesn’t increase, then the country won’t be able
> sustain its shift toward urbanization, which is part of the
> government’s current five-year plan, Gibbons said.
>
> Infrastructure Spending
>
> A slowing Chinese economy may send commodity prices lower,
> which in turn would hurt the economies of emerging markets such
> as Brazil and Russia that produce fuel and food for China. Lower
> crude oil prices might also halt the European Central Bank’s
> plan to continue raising interest rates, which would strengthen
> the dollar against the euro.
> The second question is whether the U.S. government is
> willing to boost its infrastructure spending at a time when
> Congress is struggling to cut the nation’s deficit, Gibbons
> said. A failure to spur growth will send stocks down in the U.S.
> and keep the dollar weak, he said.
> “The private sector is deleveraging and corporations
> aren’t deploying cash, so the government has to take up the
> slack,” Gibbons said.
>
> Ringfencing Europe
>
> The third issue, Gibbons said, is whether European finance
> ministers can agree to using joint bond issuance as a way to
> tackle the debt crisis in the 17-nation euro area.
> For Soros, while a Greek default may be inevitable, it
> needn’t be disorderly.
> “While some contagion will be unavoidable -- whatever
> happens to Greece is likely to spread to Portugal, and Ireland’s
> financial position, too, could become unsustainable -- the rest
> of the euro zone needs to be ringfenced,” Soros wrote in the
> Financial Times last week.
>
> For Related News and Information:
> Top hedge-fund stories: TNI HEDGE WWTOP <GO>
> Hedge-fund news: HEDN <GO>
> Hedge-fund Web pages: HGFD <GO>
>
> --With assistance from Jeff Kearns in New York. Editors: Steven
> Crabill, Christian Baumgaertel
>
> To contact the reporters on this story:
> Saijel Kishan in New York at +1-212-617-6662 or
> skishan@bloomberg.net;
> Katherine Burton in New York at +1-212-617-2335 or
> [url=mailto:kburton@bloomberg.net]kburton@bloomberg.net
>
> To contact the editor responsible for this story:
> Christian Baumgaertel at +1-617-210-4624 or
> cbaumgaertel@bloomberg.net
>
>
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