I'm not bashing the man - I'm saying he is wrong.
And btw that article is NOT what he said - that is what the author REPHRASED his opinions as. Plus the positions stated in that article are OLD positions (last quarter) and the author assumes he wouldnt want to sell for "a mere 20%" gain. Well if the guy is going to short gold of course he will sell for his 20% gain and then get another 20% shorting gold.
If you take a look at Soros' most famous call against the British pound in the 90's you will see something interesting - he bet AGAINST the pound even though the British government was raising rates to defend it. That's unusual because raising interest rates usually defends a currency, but Soros bet that essentially that the British government could not maintain their defense of the pound (by the open market buying and high rates) and that they would have to devalue it. And he was right they ended up devaluaing it and he made a ton of money.
His opinion on Gold, from the little that he's said at Davos, is essentially that the low interest rates that governments are providing are forcing people to use their money elsewhere to generate returns and thus creating these bubbles. Once governments start to raise rates these bubbles are going to collapse and gold is the biggest one of these bubbles.
The problem is that according to many including Trichet, the head of the EU central bank, government deficits and debt are on an unsustainable path. That means that even if they try to raise rates, their debt loads are so great, that they will not be able to maintain the higher rates in REAL terms (rates-inflation must be positive). Similar to 1990's England, if they cant maintain the high REAL rates their bluff will be called and they will have to devalue their currency via inflation to pay these new higher interest rates on their debt - That is definitely POSITIVE for gold and any other commodity.
Lets look at the US debt load to make the point of how they can NOT raise rates without inflation. The US currently has a 12-13 TRILLION dollar debt load (not including Social Security and a bunch of other programs) - if they balanced their budget tomorrow (even though the White house expects TRILLION dollar deficits for at least the next 8 years) and interest rates rose to 5% on government debt (a reasonable average historically) that would mean that the US government would be paying 600 BILLION dollars in interest every year without PAYING A SINGLE CENT OF PRINCIPAL! If that is paid in real terms (without inflation) that is equivalent to the US transferring SIX companies of the size on INTEL to their debtors EVERY YEAR!
If that were done in REAL terms that would impoverish the US and turn it into a slave state of its debtors.
Now back to Soros, if his prediction is correct, that governments raise their rates, these rate increases CAN NOT BE DONE IN REAL TERMS and will be accompanied by massive printing. That will cause gold to RISE even higher and faster as a hedge against inflation (anyone remember the high rates of the 70s?).
I dont know what George Soros' investments are right now, but this smells awfully like he has a major short position against gold and he wants to drop the price down lower. For my part I need to see much stronger reasoning why gold is in a bubble to change my opinion on gold.
Your Friendly Neighborhood,
MDW - Midway Gold one of only a few gold stocks I know of that insiders still buy. Small play in Nevada but ABX also owns a good amount of shares.
GG - Goldcorp a large producer that has been battered recently. Safe play that is leveraged to the gold price.
RBY - A speculative play that has rights on some possibly very productive land in Canada.
I own shares in all three of the above mentioned stocks.
Great! I hope it goes down further so i can buy some more ... gold under $2000 is still undervalued.
Your Friendly Neighborhood,
Goes to Mr Dennis Gartman!
"Dennis Gartman, founder of The Gartman Letter, told CNBC Monday that the price of the precious metal will "continue to go up until it stops. - "It is a gold bubble," Gartman told CNBC. He called the trade on gold "mind boggling," but also said he is currently long — or betting gold will go higher."
Really Dennis? So its a bubble that will continue to go up until it stops? Wow - I wish I could try and give advice like that! So basically if gold continues to rise you are right - and if gold falls, well, you said it was a bubble anyways so you are right again!
So people actually pay for his advice?
Matthew Sheerin just bought 470k shares (about $250,000 dollars) worth of MIDWAY stock in the past week.
I've been hearing a lot about how when the Fed raises rates the gold price will go right back down like it did in the early 80's. I dont think this will happen - our situation is very VERY different than it was at the beginning of the 80's.
First and foremost, we have to examine the reasoning behind why the gold price should drop if interest rates are higher. This concept is based on the assumption that as rates go higher investors trade gold (a no-interest asset) for bonds/treasuries because interest rates are more attractive now that their yields are higher. In theory, this works only if investors anticipate that the value of the currency will not drop equal to or greater than the rise in interest rates. If this rise is less than the depreciation of the currency, then investors will not switch to the higher interest intrument.
So now, in the case of the US dollar we have 13 trillion+ in debt (without counting unfunded obligations like Social Security) with the debt expected to grow to $20 trillion over the next few years based on the optimistic White House budget predictions. If we raise interest rates on this 20 trillion of debt to 5% (which is much lower than the 18% reached in the 80s) we will have to pay 1 TRILLION dollars in interest payments every year. This 1 trillion dollars can come from one of two places - a cut in expenditures (aka real payments) or using monetization/printing press (aka inflation). The first method would require us to spend over a THIRD of our national budget (2-3 trillion/yr) to pay the INTEREST on our debt - without including the principle on the debt. I'll say it again - WITHOUT PAYING FOR PRINCIPLE ON OUR DEBT! That means just to get by (without paying a single dime of principle) we will have to spend 1/3 to 1/2 of our national budget to service the interest on our debt. This is unsustainable and will impoverish and enslave our nation to our lenders - a very highly unlikely situation for our government to take.
The second option is that we inflate our currency to pay off the debt (or minimize its burden) without letting our lenders know. This is the path we are off on and it only works if our lenders continue to lend us money. The problem is that is if they believe that our currency will drop further and further and our interest rates will not compensate them enough - they will NOT BUY OUR CURRENCY AND THE DOLLAR WILL NOT RISE. Thats why hyperinflation is never avoided by higher interest rates while the currency is being inflated.
Whats the different between now and the 1980s? In the past (the 80s) the inflation that our government engaged in was minimum, almost invisible, and we were the financial superpower in the world with no other alternatives. In addition, we had the whole technological boom of the computer & internet to create economic activity and sales for our companies. Thats what happened in the 80s - our inflationary spiral was averted by higher interest rates, a technological boom that created massive wealth in the US, and NO OTHER FINANCIAL SUPERPOWERS. Neither of these 3 things are the case today.
Thats why gold will not drop as interest rates rise - we are going through (for better or worse) the removal of a single world currency and the general move away from fiat currencies. Nobody knows what happens from here on out, but one thing I do know is that gold & silver have been valuable since the earliest times and as we slip deeper into this crisis i'd rather own them then anything else.
Your friendly neighborhood,
The company bought another 2800 shares and cancelled them. Good for shareholders and it means more profits distributed amongst remaining shares.
You must be patient,
RIC is the only gold company that I have yet to see insider selling and only two weeks ago an insider bought a nice amount:
In case you dont know who Mr. Chamandy is, he is the largest shareholder with past history developing small companies and making them desirable.
All in all good news for RIC. Finally, if you look at their earnings report from last quarter it was a disappointment (I sold) but with gold prices where they are now this company may see a huge EPS increase. Do the calculations yourself with todays gold prices and last quater's production - even at the same levels of production they come out much better.
PS - bought some RIC today. (already owned a good chunk before today)
There may or may not be dilution down the road - but the fact of the matter is that NG's properties increase EXPONENTIALLY with a rising gold price. Assuming that they have 30 million oz in reserves at Donlin (with 15 million for NG and 15 for ABX) - a $10 rise in the gold price raises the value of their reserves by $150 million (at a 0% discount rate). Now imagine whats happens with a $100 rise ...
Thats why NG is rising even if dilution may be down the road - At these prices it is still very cheap.
Most people expect a pullback around $1000 an oz - but if you look at the charts the prior two times its hit weaker and weaker resistance. This time when some people take profits around $1000 it may surprise them and just keep going ... and the miners with it.
As for NG - the value of its properties (and thus its stock) jumps exponentially with rises in the gold price - I'm not selling here.
Yeah those were my initial thoughts too - I thought the grade was very low. But the key issue would be how much it would cost to build the mine and extract that grade - their property is relatively close to a ton of other mining properties so power & labor shouldnt be as much of a problem as other locations.
I guess we will see.
Exactly - if they were fake why wouldnt this hit the news and be over with? Plus, who in their right minds would choose to counterfeit bonds in $500 million amounts?? You cant receive that money and whoever does accept those amounts will surely investigate heavily before giving you a cent. I believe these are the real deal and the US government is making sure the press here doesnt publicize it while they figure out how best to deal with this.
If you havent seen this story it could be a real game changer.
Evidently, 2 Japanese men have been arrested in Italy for smuggling $150 BILLION in US bonds. It has yet to be determined if these bonds are real or counterfeit - but either way it is BAD news for the US Dollar. If they are real it means that one major creditor of the US is trying to get rid of their dollar holdings so badly they are willing to launder thme. If these bonds are fake then it is a coutnerfeiting level never matched and begets the question - why would someone try to counterfeit such a HUGE amount without actually thinking they had the means to get away with it.
Funny thing is that this is all over worldwide news presses EXCEPT in the US.
Hold your horses we have a catalyst!
Normally I dont feel too bad for people that short stocks and make posts with absolutely no knwoledge or facts backing their recommendations up ... but Hartjed is just SO WRONG ALL THE TIME i'm starting to get a little lump in my heart for him.
I mean the guy has been shorting this stock since the .40's and EVERY time he "warns" us about it - it jumps! Market is down and this stock is up 25% on the day - against Hartjed's heartfelt warning yesterday with his eloquent and wise statement, "Hope you sold - it's gonna be a long time for that chance to come again." Poor Guy..
Your Friendly Neighborhood,
Pump and Dump?? So the stock goes up 60% and then down 10% and its pump and dump?? LOL - thats my kinda pump and dump! Please sir tell me of more of these "pump and dumps"
Maybe i'll sell at $2 - after all thats where ABX bought there shares a year ago.
PS - Hartjed I need you to sell some more shares of this so I can pick up some more at cheaper price.