THE MARKETS: Market Place; An Icon's Fading Glory
By JONATHAN FUERBRINGER
Published: June 15, 1999
Sign In to E-Mail
Gold bugs die hard.
Jean-Marie Eveillard, the portfolio manager of the Sogen Gold fund, takes heart by recalling a recent comment by Alan Greenspan, the Federal Reserve chairman, that gold is still the ''ultimate form of payment.''
Mr. Eveillard said, ''You can't say that about copper and pork bellies.''
No you can't. But you can't bank on gold anymore, either. Indeed, in the nearly six years since Mr. Eveillard started the gold fund, it has lost, on average, about 8 percent a year for its investors. Only the threat of a worsening global financial crisis last fall stopped Mr. Eveillard from liquidating the fund at the end of 1998.
In fact, gold -- once the dependable haven for millions of worried investors -- looks a lot like just another sinking commodity these days in a world financial system dominated by inflation-fighting central bankers. Even Swiss bankers, the doyens of gold, do not push it anymore as part of a properly diversified portfolio because there are now many more efficient ways to hedge risk. And a whole generation of investors can only imagine the glory days when the price of gold cleared $800 an ounce for two days in January 1980.
And another one's gone, another one's gone, another one bites the dust...
Billionaire hedge-fund manager John Paulson told clients he wouldn’t personally invest more money in his gold fund because its not clear when inflation will accelerate, according to a person familiar with the matter.
Paulson, who has been betting that gold would rally as a hedge against inflation as central banks flood the global economy with money, has lost 63 percent year-to-date in the PFR Gold Fund, said the person, who was briefed on the returns and asked not to be identified because the information in private. The fund, which has shrunk to $370 million, with most of that John Paulson’s own money, fell 1.2 percent in October, the person said.
The hedge-fund firm will maintain the fund’s positions in gold stocks and let options related to bullion expire, Paulson said at the firm’s annual meeting yesterday in Paulson & Co.’s New York office, according to the person... from Business Week today
For Hendry to turn bullish on the fraud (er stock) market and Paulson (the biggest #$%$ in the world, possibly, with his collusion with the Vampire Squid in the last debacle) to give up on gold--we are starting to get somewhere. This is similar to wrong-way Bill Gross selling all of his U.S. Treasuries in early 2011--and we know what happened with Treasuries thereafter as they soared to new all-time highs:
Anyway--i'll be putting in my usual average in order for BGEIX this WE for Monday--enjoy the WE.
So the end result is that Hugh Hendry is merely the latest bear to throw in the towel:
"I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out," Hendry said.
"I have been prepared to under perform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years' time."
"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."--from Zero hedge
Hey no pressure here--the lower we go on BGEIX the better the bargains. With the last bears capitulating on the stock market--what could go wrong? We only had what 80 some odd percent bullish on the S&P--plenty of more room for the titanic to take on passengers. Since there will be nobody short by the end of year, there should be no support when the slightest accident happens to GEs. Don't worry, be happy!!
The all time closing low for HUI:GOLD ratio was in 2000 at .141--but it certainly could have spiked down in 2001 some time to .13 intra-day.
The XAU low was in the lower 40s in late 2000--gold was around 270 then. So today around 86 on the XAU gold is around 540, correct?? LOL--just shows the carnage that has happened with miners. sxxx happens!!
XAU has been around longer than HUI 1983 vs 1996 for HUI.
"So be it--All P&F charts revised to zero for PMs--there happy--what do you say? ..."
Well, guess what the "bearish price objective" for BGEIX IS ZERO--hallelujah--we now know where we are going. Praise BE!! This is from the stockcharts site--you can go there if you dare!!
Well, I guess if we are goin' down for the count by next week--that will wipe out whatever holders are anxiously watching prices--I mean who wants indigestion at Auntie Emmas on THX DAY--on the humanity!!
So be it--All P&F charts revised to zero for PMs--there happy--what do you say? If we can have negative rates why not negative miners? LOL--we'll work on it!!
I will be looking to pick up another SLV-short block early tomorrow, preferably somewhere in the 19.35/45 zone.
*lower bol' on SLV, offering a clear $1 lower in the immediate term. I expect the June lows to be taken out...and that applies to the miners..via GDX…
*I am back on the short-SLV train from 19.23, seeking an exit in the mid 18s..early next week.
From Doomie Permabeear Doomster
More or the same--go ahead and take it down captain--more bargains :)--eventually playin with fire gonna burn ya!!
I want to also emphasize that even if the Fed were to taper, say something in the vicinity of $20 billion, that would still leave them purchasing $65 billion/month of Treasuries/MBS. While that is still an extremely significant amount, what the market is looking at is the expected IMPACT ON INFLATION. The way the market currently sees it, if $85 billion/month is not producing any measurable inflation, then any reduction in that amount should further lesson any inflationary impact from the overall bond buying program. That is why gold is paying such close attention to the Tapering/Non- Tapering debate.
I want to reiterate - until the market in general becomes convinced that inflation threats are rising, gold is going to struggle. Also, we will have to see NEGATIVE REAL RATES to bring some serious and concerted buying into the metal. Barring that, it is CONFIDENCE that is going to have to give way for the current bear market in gold to reverse course. __ Trader Dan
This guy is an all out bear on PMs and has been for some time--of course he has been right, but what could happen to him would be what happened to Lt. Dan's (Forrest Gump) ancestors before him at some point. Taper is just BS. Gold and gold stock selling is the result of 24/7 brainwashing as well as tax selling--I had a piece about that yesterday from Kaplan.
I will not say that PMs will not continue to go down--I have no clue--but the BS is relentless. When the sucker turns around it will be fascinating.
Armstrong's latest on gold today...
In gold we have a Daily Bearish Reversal at 1250 followed by 1206, and 1179. But the next big area after 1206 will be 1088. The 1206 number is also a Weekly Bearish Reversal. At this point, gold has to close ABOVE 12816 on Friday just to stabilize. A weekly closing BELOW 12613 will warn we may see lower prices into next week. Our Monthly Bearish Reversal lies at 1151.80. So we have to keep this area in mind. We still see December as a key turning point and January shaping up as a Directional Change.--Martin Armstrong
As far as I am concerned, its pretty much always bla, bla, bla and there will be targets all the way to zero especially for gold stocks (not).
The Daily Sentiment Index based upon %BULLS polled as of November 21st (Thursday's Close):
Instrument % BULLS - RAW
Who do you love???--
Under the headline, “Why the New York Fed Must Be Investigated,” Spitzer explained the history of the New York Fed’s role in turning a blind eye to the rigging of the global interest rate benchmark known as Libor, a benchmark impacting everything from student loans to mortgage rates to municipal borrowing costs across America. Spitzer wrote: “The New York Federal Reserve knew about Libor games being played by the banks years ago and seems to have done precious little about it—except perhaps send a memo parroting the so-called reform ideas proposed by the banks themselves. Then nothing more. No prosecutions, no inquiries of the banks to see if the illegal behavior had stopped—just a live-and-let-live attitude.”
Spitzer called for an independent special prosecutor to investigate the New York Fed, citing the deep conflicts of interests on its Board over the years:
“Well, look who was on the board: #$%$ Fuld of Lehman fame; Sandy Weill of Citibank; Jeff Immelt of GE—the largest beneficiary of the Fed’s commercial paper guarantees; and, of course, Jamie Dimon of JPMorgan Chase, whose bank’s London derivative trades and Libor involvement make his role on the board even more absurd.”
Dimon’s two-terms totaling six years on the Board of the New York Fed ended this past December. He continued to serve even as his bank, JPMorgan Chase, was being investigated for losing $6.2 billion trading exotic derivatives with its bank depositors’ money.
And the hits just keep on coming. Last month we learned that Carmen Segarra, a former bank examiner at the New York Fed is charging in a lawsuit that she was told to change her negative review of Goldman Sachs over its inadequate conflict of interest policy. When she refused to do so, she was terminated in retaliation and escorted from the Fed premises, according to her lawsuit.
Just how long will it take Congress — that body in Washington with a 9 percent approval rating from the American people — to figure out that “just trust us” has been a killer policy when it comes to Wall Street and other people’s money.
Bank of New York.
According to the minutes, ten members of the FOMC Committee, including Federal Reserve Chairman Ben Bernanke and his likely replacement, Vice Chairman, Janet Yellen, unanimously voted in favor of the plan. The comments of those opposing the plan are opaquely described in the minutes as follows: “The Committee considered a proposal to convert the existing temporary central bank liquidity swap arrangements to standing arrangements with no preset expiration dates. The Manager [Potter] described the proposed arrangements, noting that the Committee would still be asked to review participation in the arrangements annually. A couple of participants expressed reservations about the proposal, citing opposition to swap lines with foreign central banks in general or questioning the governance implications of these standing arrangements in particular.”
Instead of the full FOMC committee, which includes Federal Reserve Board Commissioners and Presidents of the regional Federal Reserve banks, approving these interventions in foreign currencies, the Chairman of the Federal Reserve will simply now consult with a subcommittee. But more troubling, the New York Fed has gained enormous power in the process. The minutes state: “authority to approve subsequent drawings of a more routine character for either the dollar or foreign currency liquidity swap lines may be delegated to the Manager [Potter], in consultation with the Chairman.”
Simon Potter already wields enormous and nontransparent power in financial markets. Potter is head of the Markets Group which oversees a sprawling trading operation at the New York Fed. Of the 12 regional Federal Reserve Banks, only the New York Fed has a trading floor rivaling that of Goldman Sachs. Potter is also Manager of the System Open Market Account (SOMA) at the New York Fed. According to the Fed’s web site, SOMA operations are designed to influence bank reserves, money market conditions, and monetary aggregates.
The New York Fed has come under withering criticism for allowing CEOs of the serially prosecuted Wall Street banks to serve on its Board of Directors while it purports to function as a primary regulator of Wall Street. Despite having failed to detect and prevent the frauds that led to the financial collapse of Wall Street in 2008, it has received expanded regulatory powers under the Dodd-Frank “reform” legislation.
On July 16 of last year, the former New York State Attorney General and later Governor who attempted to drag Wall Street corruption into the light of day before it imploded the system, Eliot Spitzer, penned an article for Slate on the insidious doings of the New York Fed.
Fed Minutes Reveal a Dangerous Power Grab by New York Fed
By Pam Martens: November 21, 2013
Simon Potter, Markets Group Head at the New York Fed
Just when it seemed one could no longer be shocked by the corruption, hubris and lack of accountability in the American financial system, along comes yesterday’s release of the Federal Reserve’s minutes for the October 29-30 meeting of its Federal Open Market Committee (FOMC).
While mainstream media focuses on what the minutes revealed about when the Fed might begin to reduce its monthly $85 billion in bond purchases, receiving scant attention is a brazen power grab boldly stated on page two of the eleven pages of minutes.
Back on October 31, wire services reported that the temporary dollar and foreign currency swap lines that had been put in place between central banks on a temporary basis during the financial crisis had been turned into standing arrangements.
The Associated Press explained the action as follows: “Six of the world’s leading central banks, including the U.S. Federal Reserve, say they will provide each other with ready supplies of their currencies on a standing basis, extending arrangements set up to steady the global financial system during post-2007 turbulence.”
In other words, without public deliberations, an action that was adopted as a temporary, emergency operation, now had become a permanent part of world finance – on the basis of minutes and details yet to be seen by Congress or the general public.
When those minutes were released yesterday, alarm bells should have rang out from the business press. Not only did this temporary emergency measure become permanent, but the full FOMC committee is reduced to voting on its continuance but once a year and the conduct of the program has been effectively delegated to the Chairman of the Federal Reserve and a man the American people have never heard of, Simon Potter, the Manager of the System Open Market Account and Markets Group at the Federal Reserve
Comment from an article about the gold smack downs yesterday:
konseptikon rekords • 16 hours ago
The market is literally 'fixed'. Twice a day in fact. The problem is the short selling though the ETF's which were supposed to provide exposure to the gold price, but because of their massive volume, are driving the gold price. If every certificate out there required physical backing, the price would explode and the US currency would tank. It is an Achilles heel of the global economy. The irony is, since the central banks of the west require cheap gold to prop up the US dollar exchange value, they are creating massive buying opportunities for the Chinese. As the saying goes, As the gold flows, so does the power.
Dow up again on Thursday. Gold still below $1,300 an ounce. Is the US stock market headed for what Austrian School economist Ludwig von Mises called a “crack-up boom?”
A crack-up boom is exciting. Stocks head for the moon. But it’s a flawed moonshot. The rocket ship blows up because there are no real earnings or revenue growth to justify the high prices. Eventually, investors flee into tangible goods – what von Mises called Flucht in die Sachwerte…
What do you do in a crack-up boom? You hold onto your hat! And hard assets.
It’s like walking through an inner-city alley in a high wind. Everything gets picked up by the breeze – plastic bags, old newspapers, sandwich wrappers and Styrofoam cups. And when the wind stops, the whole lot of it falls again to the ground… messier than ever.--Bill #$%$