Carlos Lam

Has the Dollar Been Debauched? (Hint: Check Out the DJIA Priced in Gold)

On Nov 18 01:50 PM kohalakid wrote:

> If you are basing your gold trading on "insiders" with CASH FOR GOLD
> signs in their storefronts, you're making a big mistake. There are
> a lot of reasons to own gold, but the fact that a gold buyer in a
> storefront, who probably wasn't in the gold business a year ago,
> is buying gold means nothing.

That's not the basis of the trade. I was merely making an observation about the signs that I see and the conventional wisdom that they indicate to us. Indeed, the Dow/gold ratio IS the touchstone for me, but I do like to keep an eye on other indicators.

Has the Dollar Been Debauched? (Hint: Check Out the DJIA Priced in Gold)

When gauging gold's long term prospects, there's no question that the Dow/gold ratio is where to look. I don't know if we'll get to 1:1, but it sure is looking that way given Dr. Bernanke's money printing.

As an aside, gold isn't in a bubble. I still see jewelers hanging out "CASH FOR GOLD" signs, which means the insiders are buying. When I see "GOLD FOR CASH" signs go up, I'll start thinking about closing out positions.

Berkshire + Burlington = Hypocrisy, Expediency and Full Dose of Ego?

On Nov 05 12:33 PM SamiC wrote:

"Financial weapons of mass destruction for the idiots at AIG, Bear, Lehman, not for people like him who are good at calculating odds and spotting underpricing, and never take positions with unlimited downside risk."

Buffett didn't qualify that derivatives were WMDs of financial mass destruction only for "idiots." He made a general statement. Then, he proceeded to engage in derivative trades. Again, I do not want to invest in a company whose chairman blatantly says one thing and does the opposite. Perhaps you are correct that Buffett isn't as two-faced as I perceive him, perhaps not. Either way, I view the principle-agent risk to be too great.

Berkshire + Burlington = Hypocrisy, Expediency and Full Dose of Ego?

Perhaps he has great insights into investing, but because Warren Buffett is a hypocrite of the greatest magnitude I simply would not trust him with my money. Behold:

* Buffett criticized Pres. Bush's tax cuts and said that Americans should pay more taxes yet had BH bid for Fannie and Freddie's $3 billion in tax credits. If we Americans should pay more taxes, Warren, doesn't that mean BH shareholders as well?

* Buffett begged the US Senate in '03 to NOT eliminate the estate tax. What went unsaid was that BH has an insurance business that BENEFITS from the estate tax by selling a kind of insurance policy that makes sure that heirs have enough money available to pay the estate tax without having to liquidate assets.

* Buffett famously called derivatives "financial weapons of mass destruction" yet BH sold $2.5 billion in credit-default swaps in '08.

Such a duplicitous person may, of course, make money for those who he invests for. It's the agency risk--trusting a person who is two-faced--that would keep me up at night.

Warren Buffett on the Surge in 'Greenback Emissions'

On Aug 20 07:55 PM chap08 wrote:
> Not this time it won't. For this to happen, workers must have an
> equivalent to Buffett's economic moat. But they won't. High unemployment,
> low capacity utilization and global competition will mean that wages
> stay low. Workers had better get ready for real terms declines in
> wages.

Both wages and commodity/product prices will rise as the value of the dollar falls. Energy and food, for example, will be more costly. The problem is that wages will rise more slowly than will the cost of everyday living because of the factors which you have described.