Seeking Alpha

Even as his hand has gone ice-cold picking stocks, John Paulson's stake in gold (GLD) has served...

Even as his hand has gone ice-cold picking stocks, John Paulson's stake in gold (GLD) has served as a positive counterweight for his funds. That's no more as gold's slide (along with the miners - GDX) spurred an 18% decline in his Gold Fund in February, and is now down 26% YTD, reports Bloomberg. "We believe in the long-term outlook for these positions as QE programs continue around the world," he writes to clients.
Comments (23)
  • As the late Sir John Templeton used to advise, "Invest at the point of maximum pessimism".
    People are very pessimistic about gold right now, and about gold miners especially.

     

    Long GLD & some miners (fingers crossed!)
    7 Mar 2013, 08:21 AM Reply Like
  • In a years time, I think you will be happy.

     

    Interesting to note that SLV and DGP (double gold) have been almost in lockstep the last year.
    7 Mar 2013, 11:48 AM Reply Like
  • WHy is IAU & GLD down today when the gold price is up?
    7 Mar 2013, 02:10 PM Reply Like
  • Yes, and as someone else once said, (can't remember who).
    "The best time to buy a stock is when you're the most uncomfortable about doing so."
    8 Mar 2013, 05:34 AM Reply Like
  • I agree with him...they are still printing as fast as they can..that money will come out and play someday.....it has too.....as soon as they are done with the stock high...
    7 Mar 2013, 08:44 AM Reply Like
  • We keep hearing that what the central banks are doing by expanding the money supply is going to lead to inflation. We've been hearing this same mantra for four years and inflation keeps ticking down. The problem is that people are underestimating the strong deflationary pressures that are resulting from all the debt and efforts to deleverage the system. Yes, a lot of money has been created but clearly not enough to jump start inflation. There is near unanimity on the Street regarding QE and the inevitable rise of inflation and interest rates. The problem is that this conventional wisdom is wrong. The Fed and ECB are still behind the curve and have yet to provide enough QE to outsize the deleveraging headwinds. There are many signs indicating that a deflationary cycle is on its way. In fact, the likelihood is that we will see a global deflationary bust in 2013. The failure of policymakers to rightsize policy, that is to provide enough QE to reach their goal of reflation means a bust is both likely and imminent. Gold can bounce but it is heading a lot lower, as are all commodities, in this first deflationary cycle in 70+ years. Those who are misinterpreting current monetary policy as being inflationary and investing for this outcome are going to pay a big penalty for this faulty analysis.
    7 Mar 2013, 09:20 AM Reply Like
  • Everything you say is true, except for one problem. The inflation numbers are pure crap. Statistics don't lie, but liars figure statistics. How is it that you believe US inflation stats when the rest of the world is inflating (even UK now)? 13 of 19 quarterly stats since 2008 were later corrected to show lower GDP growth and greater GDP declines. Like I said, our numbers are BS because they have to be in order to prevent collapse and keep QE.
    7 Mar 2013, 11:50 AM Reply Like
  • contrarian,

     

    I agree thats a possibility, but do you really think the Bernanke will allow it? I think he will double, triple or whatever he thinks QE needs to prevent a deflation. QE will likely overshoot.
    7 Mar 2013, 12:10 PM Reply Like
  • "A lot of money has been created but clearly not enough to jump start inflation"???

     

    Apparently you have not been to the grocery store lately nor have you bought gas for your car. Geez, what a ridiculous thing to say.
    7 Mar 2013, 02:26 PM Reply Like
  • I live in Australia which is now one of the most expensive countries in the world however we are seeing deflation in supermarket pricing, continuous discounting in physical stores vs the online model. We do have a strong currency which helps keep the price of imports down (we import most of our gasoline and other petroleum products). Contra to that we get taxed out of our brains on imported cars, cigarettes and alcohol. Our restaurants are insanely expensive and the government (changing this year) don't know essential mathematics. In the USA you still have "cheap" gasoline so stop whining
    8 Mar 2013, 01:16 AM Reply Like
  • Providing an example of inflation is not "whining" The issue was inflation, not relative prices worldwide. Just because you have to import most of your gasoline in Australia and the prices are higher doesn't make our inflation any less.
    8 Mar 2013, 01:07 PM Reply Like
  • If the stock plummets again as it did in 2008 ( and I'm sure it will), this time I will have my bullion and miner's stocks.
    7 Mar 2013, 09:22 AM Reply Like
  • don't buy mining stocks - those companies are managed by fools. buy bullion/ETF is you really have to
    8 Mar 2013, 01:02 AM Reply Like
  • Anyone want to buy some baseball cards? How about some paper currency? Both are reprintable and worthless. Hey I'll take some gold though.
    7 Mar 2013, 09:45 AM Reply Like
  • There was a deflationary scare in the late 70's and gold responded with a drop of 50%...right before it screamed to it's high of $850. Is that what we are in for? A drop of approximately 50% from it's high in the $1,900's then the long-awaited parabolic run where fortunes are made?
    7 Mar 2013, 10:14 AM Reply Like
  • Sush! dont tell everybody.
    7 Mar 2013, 10:32 AM Reply Like
  • The gold thesis is correct because gold is money and the only real money is gold and, to a lesser extent, silver. The deflationary thesis is also correct because fiat currencies are only backed by debt and when the debt implodes so too do prices. There is one caveat, however, at some point in the cycle, confidence in the fiat currency disappears and that is when deflation leads to inflation.
    7 Mar 2013, 01:38 PM Reply Like
  • Geoffster-Why do you say "to a lesser extent, silver?"
    7 Mar 2013, 02:30 PM Reply Like
  • Silver is a more abundant precious metal and therefor less valuable. Both have served as money for thousands of years. Silver has the added benefit of having industrial uses, but has always been known as the poor man's gold. Own both in physical form and you'll sleep better at night.
    7 Mar 2013, 07:01 PM Reply Like
  • Since "AU" was good enough for Cleopatra than it is certainly good
    enough for me !!!!!!!! (as well as the other metals and gems)
    7 Mar 2013, 04:00 PM Reply Like
  • tr4, I'm not saying we are in deflation yet. I am saying that a bust is just over the horizon that will cause a collapse in prices of various assets including all commodities, precious metals, equities, junk bonds and real estate. Globally, there will be a lot of financial dislocation. People think Bernanke will head it off but he is behind the curve. By the time he and Draghi react with the appropriate policy, the bust will be well underway. I expect it to be faster and steeper than 2008 and there is no appetite for TARP this time around so it will all be on the Fed's shoulders.
    7 Mar 2013, 05:04 PM Reply Like
  • contraionadvisor spot on
    8 Mar 2013, 01:16 AM Reply Like
  • Bernake said that “The state of inflation expectations greatly influences actual inflation and thus the central bank’s ability to achieve price stability.”

     

    This seems a Machiavellan type reasoning that could influence our govt to falsify or at least minimize inflation. They hide it so we don't expect it, and cause it to occur.

     

    In other words, its all about mind control. And the inflation numbers are BS. Just use your own common sense. Do you know anybody that says that their cost of living has barely increased since 2008? Me neither.
    7 Mar 2013, 05:40 PM Reply Like
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