We have gone from selling at a premium to selling at a discount......7/5/13 NAV $8.66 Market price $8.26...and when the Euro tanks and the Yen tanks Gim's short position in these two currencies will bring NAV closer to $9.00........some of us are going to make a lot of money and share it with the IRS and Gotham City....could the pendulum swing back by the holidays or must we rely on capital gains to have a Merry Christmas ?
OK, so you have a positive spin on the currency play. What about the record liquidation of long term u.s. bonds by Japan and China that has occurred in the last few months? I don't care about a 5 or 10% drop from which we can recover, but is this the beginning of the long awaited rise in interest rates? The ground is starting to undulate with gold going up dramatically. Are these guys prepared for all possibilities? The way I see it, the u.s. dollar can easily tank against other currencies, and it can happen quickly. Buying back your own bonds is a zero sum game.
Japan, Euro Land and America CAN NOT stand any significant increease in interest rates.........their budgets can't possibly take that kind of hit today or tomorrow. QE is here forever as will be demonstrated by the new Fed Chief in January, 2014. Hence, it makes sense for me to be a holder of a diversified portfolio of foreign bonds chosen by our fearless GIM management team. As far as Japan's /China's liquidation of long term bonds is concerned, Ben is buying more every month than these guys are liquidating !