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In other GL third quarter updates, sources at Brovada say the investment team has swung from two point underdogs to 13.5 point favorites in the annual interoffice basketball game and the Greenlight baby-making machine continues to around the clock. Read more »
Paulson, the billionaire hedge-fund manager seeking to reverse record losses in 2011, posted a 13 percent decline last month in his gold fund as bullion and mining stocks fell, a person briefed on the returns said today. The loss leaves the $1.2 billion fund, which can buy derivatives and other gold- related investments, down 23 percent this year. Paulson & Co., which manages about $24 billion, posted losses during May in its Advantage funds, Recovery Fund and Partners Enhanced fund. Paulson’s Credit Opportunities Fund rose 0.9 percent last month and 5.3 percent in 2012. [Bloomberg]
The ultra-rich bankers, hedge fund managers and private equity executives of New York City have long enlisted private security firms to help safeguard them and their wealth. But as the mood on Main Street turns increasingly hostile, New York’s financial titans are cranking their security measures up to 11…One executive contacted Insite requesting help planning his escape from the United States in the event the federal government was overthrown, said Howard A. Shapiro, Insite’s chief technology officer. The executive wanted to know how much gold to keep on hand and how to escape the United States by submarine in the event of a major incident. [NYT via BI, related]
On Thursday, the newest tenant in Donald Trump’s 40 Wall Street, a 70-story skyscraper in Manhattan’s Financial District, will hand Mr. Trump a security deposit worth about $176,000. No money will change hands—just three 32-ounce bars of gold, each about the size of a television remote control. … “It’s a sad day when a large property owner starts accepting gold instead of the dollar,” Mr. Trump said in an interview. “The economy is bad, and Obama’s not protecting the dollar at all….If I do this, other people are going to start doing it, and maybe we’ll see some changes.” [WSJ via BI]
Here’s a perfect sentence to draw the ire of gold bugs: “But like paper money, gold is worth only what people believe it is worth, and because of this, it is sometimes referred to as the barbarous relic.” Look at all the buttons it presses: comparing gold to paper money! Saying that its value is just as much a convention – or, if you prefer, a “Ponzi scheme” – as that of fiat money! Using “barbarous relic” non-ironically!
That gem comes from a column last night by the Times’s Deal Professor Steven Davidoff, who set out to comprehensively annoy the Ron Paul crowd by arguing that U.S. regulators and exchanges should act to restrict leverage and limit holdings of gold because the metal is in a speculative bubble. The evidence for this includes that hedge-and-speculation demand has doubled in the last two years while industrial-and-jewelry demand is actually down, suggesting that gold is not so much trading on fundamentals. The recommendations:
Yet if regulators are going to stop the next bubble, they will need to act aggressively. Of course, they shouldn’t act in every circumstance, but when we see volatility and speculation as is the case of gold, acting to curb these forces through limiting leverage in cooperation with international regulators would be a prudent course. This would ensure that if a crash does come, it does not have aftereffects on banks and other institutions. Even if the Commodity Futures Trading Commission is hesitant to take such steps, it could, as an initial foray, take to the media to try to “talk down” the speculation.
For our own safety we’re not going to weigh in on whether gold is overpriced or underpriced, or on whether current gold demand is driven by (1) sensible concerns about inflation on the part of savvy investors or (2) Glenn-Beck-driven survivalist freakouts by financially illiterate retail buyers.* We’ll just point out that, if you’re going to have a bubble, this is a really sweet one to have.
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When I was at my last job, I tried occasionally to take a step back from deals and markets and get perspectives on the bigger picture. To that end, I once went to a talk given by the anthropological theorist David Graeber, who is perhaps best known for being fired from Yale just maybe because he was an anarchy activist who was occasionally arrested at protests. After this talk – about theories of value from a Maussian-Marxist perspective – Graeber took questions. The tone of the questions, which often began “when I was in grad school” and went on to cite Weber and Nietzsche, and the variety and topiary ambition of the questioners’ facial hair, led me to believe that I was probably the only investment banker in the room.
Graeber now seems to be courting a financial-industry audience, however, with a well reviewed new book out about the history of debt, and an interview with Naked Capitalism today. It’s a good read, both because Graeber loves to be provocative and because it has things to like for both Ron Paul voters and Paul Krugman readers.
For example, think that paper money will destroy America and QE3 would be treason? Graeber’s takes a long-term perspective. Really long-term:
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Yes, we know, the price of gold is kept artificially low by ponzi-scheming central bankers, who conspired with the CME to cost Hugo Chavez $1.2 billion today. And yes, we know that Finra is a fairly industry-friendly regulator of Wall Street banks that have a vested interest in keeping up the paper-asset bubble. Still, you may want to hear them out when they tell you that not everyone on the other side of the trade has your best interests at heart:
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Not the Fed, America, your cash flow-draining girlfriends, banks, paper, gold ETFs. Get your hands on some real, physical gold, put it in “a safe deposit box ideally outside the US, in various locations- Switzerland, Singapore, Hong Kong, Australia, Canada,” lay low and wait for his signal. Read more »
“Gold is strong in any and all currency terms, and it is now entering that stage when prices go parabolic,” Gartman said today in his Suffolk, Virginia-based Gartman Letter. “This will end when it ends; there is really nothing more that can or shall or should be said.” [Bloomberg]
Related: Dennis Gartman Just Wants To Point Out That He Sooooo Called That Earthquake In Japan
