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Macro Economist
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I have nearly a 15 year career on the buy-side, with over a decade in New York, having served in various capacities at blue chip firms as Analyst, Portfolio Manager and Asset Allocation Strategist, at one time directly overseeing several billion dollars in hedge fund assets for institutional... More
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  • It Is Time To Own Gold Again… 6 comments
    Jul 5, 2012 9:46 PM | about stocks: GLD

    (click to enlarge) Source: Stockcharts.com

    Hey Helicopter Ben, think you can confiscate my money?

    At these levels, gold is an asymmetric way to play the reflation trade.

    Better to own gold now, than 9 months ago.

    Disclosure: I am long CEF, CAF, GDXJ.

    Additional disclosure: Short global stocks against select longs.

    Stocks: GLD
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Comments (4)
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  • change is the only constant
    , contributor
    Comments (2262) | Send Message
     
    So you are saying buy bonds AND gold? I am lost in the Macro economic rationale for doing both at the same time (unless you are saying these are trades and you are (recommending) timing the buys and sells).

     

    Am I missing something......it seems the only thing this will do is guarantee a whipsaw as the dollar moves........are you (re) building a perpetual portfolio? Why would you do this (recommend both within the same 10 days)?

     

    You either believe in the manufacturing cliff (and it will trump reflation) or you do not. Which is it?
    6 Jul 2012, 12:50 PM Reply Like
  • Macro Economist
    , contributor
    Comments (454) | Send Message
     
    Author’s reply » As bond yields fall with the poor economic news, gold is the preferred reflation asset to rotate into.

     

    I think that time is coming soon (weeks).
    6 Jul 2012, 11:10 PM Reply Like
  • change is the only constant
    , contributor
    Comments (2262) | Send Message
     
    So, bond yields are falling (prices rising); and gold is rising (asset price rising)...and reflation will rise on poor (bond (and gold?) bullish) economic news.......

     

    Or in plain(er) language gold is a better (bullish) bet than stocks and other commodity choices. And, again, bond yields are going lower not bond prices.

     

    While I do not disagree with your conclusions your analysis is tough to follow; but I agree risk free yeilds going towards zero changes things. On va voir. Thanks for the reply.

     

    P.S. Like your new picture.
    7 Jul 2012, 10:41 AM Reply Like
  • Macro Economist
    , contributor
    Comments (454) | Send Message
     
    Author’s reply » Change, let me be very clear. I am getting LESS bullish on bonds for the medium term and MORE bullish on reflation assets, especially gold.

     

    I would begin to scale out of bonds with each tick up in price, and each additional piece of bad news. The reason is that I am increasing the probability of a major coordinated intervention, which includes the United States. I also believe it will work. That could temporarily push bond yields back up for a year or so (until the next crisis).

     

    But I do not yet have a signal to be uber-bearish on bonds so I am ambivalent and playing what I think is the better asset to be in.

     

    I will write about this extensively when I refute the "US is going into recession claims."

     

    So yeah, this is a tweaking of the view. We "recommended" TLT at 117 and it's now at 127. We said the ISM was no good and payrolls would probably stink and bonds would be bid vs. stocks - they were.

     

    Now we are saying, don't press your luck anymore.

     

    FYI: I am also trying to redirect some traffic to my blog.

     

    Thanks!
    7 Jul 2012, 11:14 AM Reply Like
  • Michael Clark
    , contributor
    Comments (11848) | Send Message
     
    No rebound until 2019. I think gold is a buy from 2001-2019; however, we are in the never-never land for gold, which is really the never-sometimes land. And I would not NOW buy gold when the US Dollar is trending higher. So I think we have some waiting to do.

     

    I'm expecting a lot more deflation and political chaos. When the social breakdown really begins in Europe we'll see the Dollar and Gold rising together. Remember, gold is not only an inflation hedge -- it's a social chaos hedge. And eventually interest rates all over the world are going to go up.

     

    In 2019, shortsellf gold and walk away for 18 years.
    18 Jul 2012, 01:18 PM Reply Like
  • Macro Economist
    , contributor
    Comments (454) | Send Message
     
    Author’s reply » Fair view. I can't argue with the logic.

     

    It's indeed very binary. My point on gold, which I poorly made, is that you cannot concurrently have gold falling and stocks rising anymore.

     

    The bulls better hope Gold rallies, otherwise we're screwed as you describe.

     

    I still believe that the authorities will bring out a bazooka when the market begins to fall again (which I am expecting to begin very soon now).

     

    Needless to say I am locked and loaded short.
    18 Jul 2012, 02:27 PM Reply Like
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