Monday, February 28, 2011
Sunday, February 27, 2011
Saturday, February 26, 2011
Friday, February 25, 2011
Graph 2. GDP with and without government spending: Blue is with. Red without.
Thursday, February 24, 2011
Wednesday, February 23, 2011
Monday, February 21, 2011
Many of those calling gold a bubble have done so simply on the basis of George Soros’s recent comments regarding gold being the ultimate asset bubble.
George Soros said subsequently “It’s all a question of where are you in that bubble ... The current conditions of actual deflationary pressures and fear of inflation is pretty ideal for gold to rise.” This would suggest that he is bullish on gold, contrary to much of the media headlines and commentary.
As ever with hedge fund managers and large investors it is important to watch what they do rather than what they say. In the last quarter, Soros's biggest buy wasn't actually a stock. His firm spent $64 million on shares of the iShares Gold Trust (IAU).
Hedge fund manager John Paulson also continues to buy gold. He personally made $5 billion in 2010 on a massive bet on the price of gold.
His firm, Paulson & Company, owns securities that represent the rough equivalent of 96 metric tons of the metal.
Also, over the last five years these countries have increased their sovereign gold reserves:
1. Saudi Arabia: 126% increase to 323 tons of gold reserves.
2. China: 76% increase to 1054 tons of gold reserves.
3. Russia: 72% increase to 664 tons of gold reserves.
4. India: 56% increase to 558 tons of gold reserves.
Meanwhile, on the other side of the bet are the geniuses at CNBC, Fox News and the Wall Street Journal all claiming gold is in an unsustainable bubble.
CNBC correspondent Bob Pisani recently made such a claim when he gave his 2011 stock predictions , including the statement, "the gold bubble will pop."
Fox News' Dave Ramsey pontificates just last week: "
A bubble is when an investment is no longer based on numbers, but on greed or fear. So, you’re right on about it being a gold bubble. That’s exactly what’s happening at this point. Now, should you take advantage of that? Absolutely not. You never know when a bubble will burst, but trust me—the bubble will burst on gold.
Wall Street Journals Alan Mattach quips: "You know something funny’s happening in the gold market when the page three girl in the Sun newspaper starts quoting the shiny metal’s futures price," as evidence of gold imminent demise.
Agreeing with Fox, the WSJ, and CNBC are the following countries that have reduced their gold holdings over the last five years"
2. European Central Bank: 35% decline to 501 tons of reserves.
3. Sweden: 26% decline to 126 tons of gold reserves.
4. Switzerland: 19% decline to 1040 tons of gold reserves.
5. France: 18% decline to 2435 tons of gold reserves.
So you decide with whom you'd rather bet. Soros, Paulson and China? Or Pisani, Ramsay and Spain?
Sunday, February 20, 2011
Saturday, February 19, 2011
Gold-stater weekend commentary for Feb 19, 2011.
Friday, February 18, 2011
Thursday, February 17, 2011
From Forbes Magazine: Even US banks now consider gold to be a currency:
JP Morgan Accepts Gold As Collateral For Stock Purchases
Comes the revolution!. You can use your non-income producing gold as a way to buy other securities yielding some income return or as a way to post money with counter-parties.
This means gold holdings of hedge funds or wealthy investors will be treated as the equivalent of treasury bonds or other securities that can be used to leverage other investments. Another imprimatur for gold being treated as a normal credit substitute in financial markets.