Greg Weston

Will a 'Silver Bullet' Finally Kill the Metal Manipulators?

"criminal conspiracy"
"fraudulent investment vehicles"
"real inventories only 1/3rd of what is claimed by the Manipulators"

Seek medication.

The Reflation Trade Portfolio

I disagree with general buying of emerging market currencies. In times of geo-economic crisis, they have generally performed much worse than developed economy currencies.

In developed economies, there is a more of an economic cushion during downturns and a higher degree of political stability, so monetary policymakers can avoid the temptation of engaging in competitive devaluations with other economies.

Another issue with emerging market currencies is who are your counter-parties? Will they still be solvent and ready to pay you and other people who shorted the dollar if there is a sharp drop in the dollar? Perhaps not.

The Manipulation of Gold Prices

Rob: as a store of wealth, stuffing $100 bills under your mattress would have been better 28 years ago. You would have lost 0% nominally rather than 12%.

Also better stores of wealth would have been the vast majority of stocks and bonds; plus most any bit of U.S. real estate; plus most fine art and antiques.

Gold needs to do better than inflation in order to be a true store of wealth. But that won't happen unless real demand for gold rises faster than supply. That very well may happen, but it is hardly a sure thing. You're better of with TIPS.

For one thing, technology will probably reduce the amount of gold needed for industrial applications. And gold jewelry seems to be much less in fashion than it was in the age of Mr. T.

All that said, I have a small long position in GLD, not because of any fundamentals, but because I think there will be a greater fool out there who will overpay even more in the near future, in part because of the credulous reaction of so many to articles like this one.

The Manipulation of Gold Prices

Why gold is a poor long term investment, from Wharton Business School:

knowledge.wharton.upen...

The Manipulation of Gold Prices

These "short selling conspiracies" sound a lot like the BS coming from the "evil naked short selling" folks a few years ago.

Their two big stocks they whined where being manipulated were NFI and OSTK. NFI is now bankrupt and the stock worthless, and OSTK is down about 75%.

Gold won't go down 75%, but it is not a good long-term investment. It is STILL far below its 1980 price. Even with the recent huge bear market we are in now, the S&P 500 is 8 times higher than its 1980 price. Gold, on the other hand, is down 12% over the past 28 years.

Or you could have put your money in "fiat money" US long bonds and made more than 10% a year whole the goldbugs lost on average 0.5% a year, actually much more since they incurred storage costs.

The Manipulation of Gold Prices

Mr. Conrad wrote on 9/22/08 that:

"I believe the best course of action is to sell out of index funds and stocks, and buy GLD, SLV, physical gold, silver, precious metals mining stocks, companies that own agricultural land, Swiss francs, and other solid foreign currencies."

If you followed his advice, you would have bought GLD for $90. It is now about $74.5. SLV was around $13. It is now 9.4.

The gold miner index he told you to buy was then 38. It is now 23.

The Swiss Franc he told you to buy was then 94. It is now 82.

There is no better sign of a bad investor than crying "manipulation" and sprouting conspiracy theories when his bad calls go down 20-40% in a matter of a few months.

Expecting Epic Gains in Gold Miners

Sorry people, the money supply growth all occured 1993-2006.

Expecting Epic Gains in Gold Miners

bot: banks AND borrowers need to cooperate with the Fed if the collapse in the money supply is to be corrected. Right now they are not. Consumers and businesses are being crushed with record levels of debt, and many, perhaps even most, financial entities are insolvent if their assets are marked to market.

Japan has done everything it could to fix its deflationary spiral, but failed. The Nikkei and nominal land prices are well below levels from the early 1980's.

It is certainly possible, in theory, that we will see an inflationary overreaction to the current inflation. That's why I am short gold via GLD puts rather than outright shorts: my downside is limited.

Nonetheless I think this is very unlikely. Japan 1990-2008 is not the only example of prolonged deflation BTW, this happened to the US during the great depression as well as several times between 1865 and 1914.

Finally, even if deflation is not as bad as I fear, a return to the low stable inflation of 1984-2000 would still be horrible for gold.

Expecting Epic Gains in Gold Miners

Hal confirms the stereotype of goldbugs as Rush Limbaugh-listening nuts ranting and raving about "Marxism."

Buy and hold? Well if you had done that in 1980, you only would have had to wait 28 years to make your money back.

See you in 2036 Hal. In the meantime more rational investors will be buying companies that produce and sell goods and services for a profit. Your metal will sit in you backyard bomb shelter collecting dust while normal investors will enjoy reaping dividends and capital gains.

Gold Miners: Amazingly Cheap

If "Fed money is flooding the market" then why is it so hard to get a mortgage or business loan?

The US real estate market and stock markets have lost a combined $8-$12 trillion. Leverage is collapsing. This means a vastly smaller money supply. Which means fewer dollars chasing the same amount of gold (and silver, oil, corn, etc) leading to falling prices.

I would not be surprised to see gold return to $400-450 range.

Gold Miners: Amazingly Cheap

The second of 2 SA articles today pumping gold that ignore deflation.

For an overview see this article by a former gold bull:
globaleconomicanalysis...

Even better, look at the rise in the dollar and the fall in every single other commodity.

BTW India is the biggest buyer of consumer gold, and is now deeper in economic crises that the US.

Expecting Epic Gains in Gold Miners

Another article pumping gold that doesn't mention that the current worldwide deflation.

An overview from January that has been proved right:

globaleconomicanalysis...

Why Gold Will Rocket

Also beware of professional gold bulls. They are bullish on Gold at 100, 1000, and everything in between. That's their job.

Why Gold Will Rocket

Another tired conspiracy-theory-lade... article pumping gold.

Sorry, those positions you bought at 950/oz are not coming back.

While a stopped clock is right twice a day, goldbugs have been right twice in 30 years. Gold has had 2 bull markets in the past 30 years. The first one ending in 1980 and the 2nd ending this year.

Not much of an investment if you ask me.

Gold is going to continue to fall just like every other commodity.

PS: Buy some GLD 65 puts for Jan 2010. Only $8 a pop. Huge profits when the gold bubble ends and the metal returns to its long-term price of $350-450/oz. I think we may even overcorrect to below that range.

Bullion Shortage and Spot Prices Tell Two Different Gold Stories

Your blog was pumping silver and talking about "bullion shortages" back when it was at $17.