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Matthew Cowie

 
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  • All That Glitters Is Dividend Gold [View article]
    It's all about the price of gold. Above $2,000 an ounce and higher, these will become dividend darlings. Above $2500 these stocks will have more cash than they know what to do with.
    Jul 3 07:40 AM | 1 Like Like |Link to Comment
  • Cutting My Dividends By 35% - Improving My Dividend Growth Portfolio [View article]
    It may have to do partly with different sector exposure. VIG would have dropped many financials in the 2009 rebalance due to them not raising their dividends. If you look at VIG, it still has a lower financial exposure (about 7%). VIG has less tech, more industrials, etc.

    If you look at this chart http://scharts.co/UF4cXN which is the ratio of VYM to VIG (a rising line is VYM outperforming) VIG beat it handily in 2008, likely due to holding higher quality firms (quality here meaning less chance for a dividend cut), but during the bull market, this leaves more room for beaten down VYM to play catch up.
    Jun 24 08:59 AM | 1 Like Like |Link to Comment
  • China Finance Online - A Stock Primed To Quadruple; $13 Price Target [View article]
    Eventually, Chinese investors will become interested in their stock market again, but I anticipate Americans will get more pessimistic first and might sell down JRJC and everything China if the economy really slows below target growth this year, which right now is looking like a strong possibility. I like this firm though, and I met with one of their sales agents. It's also worth looking at some HK-listed Chinese financial companies.
    Jun 13 01:26 PM | Likes Like |Link to Comment
  • Molycorp's $560 Million Intangible Assets Are Worthless [View article]
    China’s Rare Earth Toxic Time Bomb to Spur Mining Boom http://bloom.bg/1iTqLNs

    As part of its pollution clean-up, China, which controls 90 percent of the global market, is studying the introduction of new taxes and regulations for rare earths in the second half that are forecast to drive prices higher.
    Jun 4 05:37 AM | Likes Like |Link to Comment
  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    I think you are right, but for the wrong reasons. On #1, you may be right, but I will give the WGC their estimate.

    On #2, Chinese are using copper, steel and other industrial metals for collateral. Gold is a far superior asset especially because if debts go bad in China, you would expect industrial commodities to plummet more than gold.

    On #3, they do not care what they pay for collateral because the goal is to get credit. What they need is an asset that let's them access credit. These borrowers face black market interest rates of 20%+ or buying copper or gold (maybe at a premium) to get a loan for far lower interest.

    Why WGC report is not very important in the long run: that gold will never leave the Chinese banking system. Banks will take the collateral and hold it or it will move into the hands of Chinese investors, consumers or the PBOC. It might depress prices and demand, but only temporarily. Whereas copper or steel face a structural decline in demand if there's a major financial crisis because this will accelerate the rebalancing of China's economy.

    Another reason not to worry about it: rehypothecation. If you showed me proof there are 1000 tons of gold used in financing deals, I would still not believe it because there is already evidence of borrowers using the same collateral multiple times. Maybe there is only 100 tons, but 1000 tons on paper. We don't know. Chinese in at least one case in Chongqing even rehypothecated a whole office building.

    Finally, if there is a major crisis, the yuan will depreciate. The government will print money or deplete its reserves to bail out the system, which results in yuan depreciation. Since gold is easier to buy than foreign currency, gold will be a popular asset. Also, stocks are unpopular and home prices will tumble if a crisis erupts here, which again is favorable for gold.
    Apr 20 01:05 AM | 5 Likes Like |Link to Comment
  • Why China Buying Gold May Be Bad For Gold's Price [View article]
    China prefers gold to Treasuries because Treasuries have political strings attached while gold does not.

    However, one has to wonder about the logic of selling your reserves to defend the currency. As the Thais found out in 1997, if you have a peg and sell your reserves you are depreciating your currency, not defending it. It's possible to defend the currency if the government chooses the path of hyperdeflation, but history shows that currency depreciation is the most common choice.

    If China sells off its Treasuries, it would be to depreciate the yuan against other currencies in order to get out of a deflationary situation. The dollar might even strengthen because the impact of a depreciating yuan would lead to all Asian currencies depreciating. Those Treasuries would catch a bid.

    The PBOC will keep their gold holdings secret until they have decided the yuan is oversold, then they will announce their gold holdings. The result will be the end of yuan selling and a far more competitive economy with a very strong hard asset backed currency.


    I do think Chinese gold buying could be a problem IF China has a crisis and consumers stop buying. However, this requires them not to view gold as safe haven asset. In China, it is much easier to buy gold than it is to buy U.S. dollars, so if the yuan depreciates, gold is likely to find buyers. This may be the case in many emerging markets as well.
    Feb 21 03:08 AM | Likes Like |Link to Comment
  • Will Barrick Gold Shine Again? [View article]
    Sell the low cost mines that will be more highly valued today and buy the under valued high cost mines.
    Dec 17 11:07 AM | 1 Like Like |Link to Comment
  • Are We In A Stock Market Bubble? [View article]
    There is a bond bubble.
    Nov 14 03:09 AM | Likes Like |Link to Comment
  • Cisco Plunges On Terrible Guidance [View article]
    Today, the bigger impact is weakness in emerging market economies. Next year is when the NSA impact will start to be felt. Europeans are not happy with American tech companies right now.
    Nov 14 02:55 AM | Likes Like |Link to Comment
  • Taleb Versus Reality [View article]
    Hugh Hendry, and I think Kyle Bass as well, have talked about buying CDS very cheaply from banks, and one of them said the bank called back a while later and tried to get them to close the position because the risk department realized they were exposed to big losses.

    Taleb is not just talking about finding mispriced options, he's talking about systematic risk because the options pricing model is wrong. The options/CDS are worth pennies because the model says so, not because the actual risk is that low. It can't work on a systematic basis for that reason, but that's why Taleb writes books and calls economists names. People with Nobel prizes are out there offering misguided advice and the only way to solve risk inherent in the system is from without, but that requires changes to political and economic thinking.
    Oct 17 03:43 AM | 1 Like Like |Link to Comment
  • Taleb Versus Reality [View article]
    I think Taleb is talking about investments because he was interviewed by the CFA. If he was interviewed by the New England Journal of Medicine, his advice to doctors and medical researchers would be:

    1/n
    Barbell – safe & risky
    Positive optionality
    Want a floor – no “fake low volatility” (iatrogenics)
    Avoid leverage – operational & financial
    Alignment of Interests

    Read Antifragile, it will make sense.
    Oct 15 11:59 AM | 1 Like Like |Link to Comment
  • Why There Won't Be A Strong Dollar Even If The Financial Establishment Thinks So [View article]
    It's all relative. I don't expect a strong dollar, I expect an emerging market currency crisis.
    Jul 24 08:56 AM | 1 Like Like |Link to Comment
  • The Cost Of Mining Gold: A 101, And A Critique [View article]
    There needs to be a middle number: ASICs + Exploration/Acquisition

    The delta between Hebba's number and ASIC gives a good picture of corporate efficiency, but it will be distorted if one firm is adding mining assets and another is cashing out. If you have the exploration/acquisition costs separated, then you have a solid picture of what's happening.
    Jun 17 09:46 AM | Likes Like |Link to Comment
  • Dr. Doom Has Gold Going Below $1,000: Why His Thesis Is Spot On [View article]
    His thesis is a joke. Gold may well go below $1,000 for economic reasons, but not politics. First, Americans are a minority of the gold market, about 5% of global demand. Conservative Americans are maybe 1/3 of all Americans based on polling. Maybe 10% of them actually bought gold? That would be really high, but let's use that number. So 10% of 30% of 5% works out to about 0.15% of global demand from conservative Americans buying into political hype.
    Jun 5 10:41 AM | Likes Like |Link to Comment
  • Gold Liquidation Now Accelerating [View article]
    I don't disagree with you. We definitely had a global crisis in 2008-2009 and it was arrested by unprecedented globally coordinated central bank intervention.

    I'm saying the endgame can take much longer than we think, not that there will be no endgame. 2008-2009 was a clear marker of a change in the world and we are in the intervening years, like the time between WWI and WWII. And to stick with the analogy, I expect the U.S. will be the last one to join in the next crisis because it is the reserve currency holding up the global financial system. It will fall last, not first. Hyperinflation or sovereign debt crises will play out all over the globe before the U.S. succumbs.
    May 23 12:00 PM | Likes Like |Link to Comment
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