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Matthew Green

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  • Congressmen Weiner and Waxman Set Gold Hearing [View article]
    I say let them do it, dig their grave a little deeper. I don't know what percentage of the wholesale bullion supply these firms comprise, but if they limit the activities of such companies, whose primary business is SELLING, they will only be tightening the supply, at least temporarily. Less supply opens the door for a higher gold price. These small firms and Glenn Beck are not what is driving the price higher, and I have a feeling both Congressmen know it. They'd have to dig deep down, down to the very bottom of their souls, but they know it. This hearing won't provide more than a moment's diversion.
    Sep 16 02:11 PM | 27 Likes Like |Link to Comment
  • Is Gold Losing Its Luster? [View article]
    "gold is interesting because it has no intrinsic value."

    Well, the Dollar is interesting because it has no intrinsic value. It's just a piece of paper. We humans have decided that gold has value for, as people have mentioned here, 5000 years. We have decided that the dollar in its current form has value since 1971. Gold has a slight head start and has been through worldwide famines, societal upheavals, and numerous depressions of many civilizations, yet we humans still put value on it. In the same way, the dollar is valuable because the world perceives the full faith and credit of Uncle Sam as having value. That perception and subsequent assignment of value could end just as easily as that which is put on gold. Given gold (and silver's) history, I wouldn't bet on it.
    Jul 27 07:51 AM | 21 Likes Like |Link to Comment
  • Bernanke, Gold, And the Keynesian Endpoint [View article]
    "I don't fully understand movements in the gold price." That could be his own subtle way of suggesting gold is in a bubble. Of course, Greenspan had his own ways of observing this. He didn't "fully understand" the extent to which his rate cuts would create "froth" in the housing market and clearly didn't "fully understand" the extent to which irrational exuberance would proliferate in the late 90's.

    This reverberates along the lines of why the Fed and central banks should not be predominately governed by career academics. I greatly admire Greenspan and Bernanke's academic work and their lives of public service, but the board of governors of the central bank should not be as such. Central banks the world over are governed by those who are potentially intellectually imprisoned by their years of study. The result of which is, at certain times, an inability to think outside the box. The system as it currently is would work better if the main board of governors was split more evenly between the academics and those who built companies from scratch. Those whose worldviews were shaped by the demands of the real economy/main street, the worry of having enough money to pay your employees, etc, would really add a lot to the discussion, in my opinion.
    Jun 14 11:50 AM | 21 Likes Like |Link to Comment
  • Sell U.S. Real Estate, Buy Physical Gold and Physical Silver [View article]
    Mark, assuming your name indicates your geography, I take it you live in Carmel or Fishers? If so, I have relatives who live out by Geist Reservoir so I know exactly what you're talking about and I could not agree more.

    We had to save the banking system, or we wouldn't have had an economy. That said, what everyone, banks and most investors included, had forgotten was the historic relationship between wages and house prices. You need one to rise for the other to rise, and recent generations aren't making as much as their parents, therefore prices have to be lower for that relationship to work again. The sacrifice of saving the banks and the first time homebuyer credit, etc was that rather than letting prices fall to a level where Americans could actually afford to buy again, they are drawing out the process. I can say that I for one am not planning on buying my first place for at least five years, as are most of my peers.
    Sep 7 11:36 AM | 19 Likes Like |Link to Comment
  • Mass Layoff Numbers Will Surprise Markets [View article]
    This is just the tip of the iceberg with regard to public employees layoffs, as most states/municipalities have not dealt with their budgets in a meaningful way. The latest news out of California this morning is a perfect example.
    Jul 29 08:29 AM | 19 Likes Like |Link to Comment
  • The Third Depression? [View article]
    Not that I would ever want the USSR back, but the arms race had less to do with taking care of the Russkies than the Soviets hanging out in Afghanistan did? During his second term Reagan was reducing military spending while maintaining a hard line with Gorbachev. Another thing that helped was the dramatic fall in oil prices during the mid-80's. Reagan convinced the Saudis to increase production, and the price fell over 60% from 1984-87, slashing the Soviet Union's export revenue in the process.

    As for the card being paid off the in 90's, assuming you weren't referring only to military spending; sure, after Newt and the Republicans insisted on balanced budgets, we temporarily started living within our means, and the economy helped in a big way. We all know it was far from being paid off.
    Jun 28 02:15 PM | 19 Likes Like |Link to Comment
  • 3 Ways to Play the Bursting Gold and Silver Bubble [View article]
    The UltraShort ETF's DZZ for Gold and ZSL for Silver are also worth taking a look at, as buying Gold and Silver at these levels is still risky. This dip could last 3-6 more months but a full-blown bubble popping is years away.

    Agree with most of the points about the rapid run-up, I've been waiting for a correction since November, especially in Silver. The conspicuous absence of mentioning the fundamentals (Asia's buying, West's budgets) is notable, though. The author mentioned that Gold is a currency hedge, but that doesn't come close to telling the whole story. Moreover, the debt problems of the western world may be a factor supporting the prices, but the fact is that Asia may very well be in the driver's seat here in terms of controlling the price simply because they are buying more and more every year. As long as those nations' level of wealth continues to rise year over year, they will be driving this secular bull market in the metals.
    Jan 19 12:41 PM | 17 Likes Like |Link to Comment
  • Gold Enters the 'Mania' Stage [View article]
    That is the thing about bubbles, calling the top is historically more or less luck. Even in the case of the housing bubble, many called the top too early, bet against it, and in the end lost or broke even. Paulson's timing was perfect, with all due respect. Julian Robertson, easily one of the Top 5 stock pickers ever, called the top of the tech bubble in 1997-98 and, along with a bad bet on the Yen, had to liquidate right at the top of the tech bubble. Many bet against the tech bubble during the LTCM crisis in 1998, you can't blame them when the market was 15-20% off its highs. Equally good arguments were made on both sides. But it wasn't done.

    Gold has had a good run the past month, setting new highs, so naturally the voices calling a bubble or even an outright top are surfacing once again. We might be having this discussion again when seasonal buying takes over this fall and PM's continue to set new highs. In the meantime, treading carefully is key.
    May 13 01:39 PM | 16 Likes Like |Link to Comment
  • Bernanke's Dilemma: Hyperinflation and the U.S. Dollar [View article]
    Great article. Lots to say but I'll keep it short. The US could go the route of Japan or Argentina, and seems to have picked the latter. For example, Japan waited until 1997 to initiate a zero interest rate and intervene with the banks. Granted, there are many other factors at play such as demographics, but the writing is more or less on the wall. You mentioned the situation in certain states, and I agree. California is the canary in the coal mine for what is to come. The Greek debt crisis merely temporarily deferred attention from the US.

    From 1976-1991, Argentina experienced four currency reforms and two bouts of hyperinflation, 1 "new" 1992 peso equaled 100 billion 1976 pesos. I'm not saying that is going to happen in the US, because we also enjoy the luxury of having our currency used as the dominant reserve currency (I admit that we have abused this privilege, however). On the other hand, if/when the situation gets really bad, if the rest of the world doesn't band together to prop up the dollar, we will be in big trouble.

    Ultimately, inflation averaged 2-4% per annum from 1983-2008, if we have a period of twenty years where we can manage to control it at 15-20%, that in my opinion would be better than it happening all at once.
    Mar 10 09:55 AM | 16 Likes Like |Link to Comment
  • The Silver Correction May Have Started [View article]
    Our nation collectively facing up to the heart of its financial problems and future, read: entitlement cuts, is a day that will be pushed off until it is upon us, and even then there is no guarantee it will be properly dealt with. If the events of this week in France and the UK are any indicator, I would not think Obama, or Congress depending on the results in two weeks, would make a hard sell on solutions heading into 2012.
    Oct 22 09:06 AM | 15 Likes Like |Link to Comment
  • China: The Mother of All Bubbles [View article]
    To compare, the only debt Americans cannot walk away from, of course, is educational debt. Wages can be garnished, tax returns intercepted, and the debtor is ineligible for further federal education loans. That's one reason the for-profits are destined for a trainwreck. APEI's earnings debacle last week is just the beginning.

    As for China, what goes up must come down, although until a few years ago that wasn't supposed to be true about real estate, right? If you lived in Great Britain, Japan or a lot of other places you'd know that it was. Real estate prices going up by multiples of two or three in a single year is a clear sign of a bubble, no matter where you are. If it was doubling over the course of five years, with the rural-to-urban migration patterns I'd be less skeptical. Will there be a correction? Of course. The US real estate market had localized corrections from time to time in the years from 1946-2007 (1980's in the sun belt, etc), but national home prices on average rose nearly every year over that time period. The real question will be how, and will, the Chinese government be able to hold it all up? I wouldn't be surprised to see the government freeze assets and prevent selling if demand starts to abate.
    Aug 9 06:20 PM | 15 Likes Like |Link to Comment
  • Decline in Stocks Over the Next Six Months? Beware Misleading Research [View article]
    It's the Michael Moore research method applied to economics. You can vary the research parameters, even the data once in awhile, as long as the final product supports your thesis. Even better if there is little data to begin with. Then it's dressed up, packaged and presented as part of an entertaining, even compelling take on, in this case, the economy.

    As a history/economics student a few years removed, an observation regarding these times is that many more data sets than normal are going to be unprecedented without going back 30-35 years, and in many cases back to the Great Depression and beyond. For those whose data sets don't go back so far, so many more things can be unprecedented. A great example was LTCM, or any other hedge fund that failed because the quants became intellectually imprisoned by their time-dependent models. LTCM's models calculated large moves in Treasury and Swap spreads that had occurred as recently as 1987 and 1992 as statistical near-impossibilities. Their data sets didn't go back that far, and July-September 1998 was a bad time to try and adjust them. More recently, it was the comparison of post-1982 data sets, particularly since 1990, to data sets of past eras that led to the suggestions of a Great Moderation in which volatility across the spectrum of data had found new, permanent lows. The change in eras that began in 2007 immediately threw that paradigm out the window.

    The suggestion that any economic era has the chance of permanency is as laughable to history scholars as spreads moving 20 points in a day once were to Meriwether and Co.
    Apr 6 01:15 AM | 15 Likes Like |Link to Comment
  • The Silver Bull Market Is Over [View article]
    This will become a great opportunity to buy on a major pullback within the bull market. I've been a Gold/Silver bull since the bailouts and QE started, and I can tell you that the fundamentals won't change. We can't just jack up rates to 20% like we did 30 years ago, otherwise we'd suddenly be paying (literally) trillions on the new issued debt for which we have no source of funding, save for raising taxes enough to wound the nascent recovery.

    I haven't posted any articles on this since the breakout started in September because I had no idea when this breakout would end. I personally thought the pullback in January may have been the end, and what has happened since then is truly remarkable. But there may very well be a chance to buy just under $30 an ounce again, as that is currently where the 200-dma stands. At each stage in this bull market with the exception of 2008, the price of silver pulled back to the 200-dma, which has proved to be a major long-term support level. Those who bought when it dropped below in late 2008 have made a killing, and will continue to do so.

    Bottom line, this bull market is far from over. But I wouldn't touch it right now. Maybe use some ZSL to hedge the long positions and then use that cash to double down at lower levels.
    May 3 12:28 PM | 14 Likes Like |Link to Comment
  • Paul Vigna skewers Jim Cramer as an "insufferable jackass": "He’ll never be honest with his viewers, because being honest apparently isn’t how you get viewers on CNBC... He knows stocks are overvalued. He knows stocks are rigged. But he still tells people to buy them."  [View news story]
    I've learned a lot from him, for better or worse, good things and bad. There's nothing wrong with listening to a guy with near-encyclopedic knowledge of individual stocks but I wouldn't weight his advice more than anyone else's. Warren Buffet I might listen to a little closer, but back to Cramer. I fear he's setting himself up once again to take a lot of heat if the market corrects significantly, maybe Jon Stewart will have to bring him on again for Round 2.
    Mar 3 06:22 PM | 14 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Another debt ceiling raise, another round of KCR - kicking the can down the road. You could say this is KCR6, with 6 raises since 2006. That's one per year. It is amazing how few news stories have noted the frequency at which this has happened. Yes, we had to shore up the banks, yes, we had to get the economy going again, of course. This debt ceiling raise was even able to be delayed because tax receipts were more better than expected, but we can't do this forever. Wow, if only they had QE's every year, I wonder where the S&P 500 would be at now...

    I wonder what Obama is really thinking when he describes a failure to raise the debt ceiling as "unthinkable," as he did last month. "The buck stops here" takes on a whole new meaning, apologies to Harry Truman.
    Feb 22 08:51 AM | 14 Likes Like |Link to Comment