oldgoldbug

Insana Upgrades, from Fort Lee to Scamford

Does this mean talking about it is easier than actually doing it??? Hmmm..

Are Hedge Fund Programs Driving the Market?

Its good to see what I've been thinking written by some people who know. Everything is exaggerated, both up and down. Look at the move in Cummins (CMI) the last week or two: skyrocket followed by crashing. Could the fundamentals have changed so much in a few days. I think not. Someone has to take the other side of these guys so perhaps that is why bids and offers are pulled when they are on a binge and the movements are even greater.

Evaluating Ambac: Intrinsic Value Withstanding Market Volatility

"Veracity" not "voracity" although the latter is quite appropriate. Perhaps their voracity is what got them in trouble and we are looking to their veracity for an honest answer to all our questions. Nonetheless looks like a bargain.

Insiders Preparing for Major Drop in Oil Prices

I agree - too wordy, silly overstatements etc. But the gist of the article is well reasoned and presents a point of view diametrically opposed to "what everyone knows". More importantly, market action has been going the author's way. By the way, I thought T. Boone made a nice wiggle the other week when he talked about oil possibly going down before it went up. Good cover if you need to unload and don't want to be accused of sandbagging. Good luck to all.

Ten Bear Market Phases, Current Edition

Well done.
Long term support at 10800+ on Indu makes an attractive entry point but fraught with risk.

Selling the Short Sellers Short: Another Sign of Trouble

Naked shorts are similar to the "bear raids" back in the day which were a major cause of the 1929 Crash along with 10% leverage. So here we are again 80 years later with the same problem, only now it is 95% and more leverage. It is incredible that any of these banks on the wrong side are still standing....or are they? It all comes down to greed and Wall Street is insatiable. Bend the rules, break the rules, repeal the rules - none of it matters if they can make a buck and it doesn't matter to them who gets hurt.

These Three Deep Sea Drillers Look Like a Bargain

Hey Dave, tell us more about money managers going to cash. Are you talking about oil/oil service or market in general?

The Great Oil Deception: Part Three

Thanks to the author and all the well informed subsequent comments.
To johnesherman - take a look at Valero or Sunoco and you'll get a good insight into some of your questions.
It seems to me that the rocketing oil price might have a lot of hedge fund money propelling it perhaps significantly above the physical markets equilibrium point. If that is the case and if those guys decide they need greener pastures, having made a massive bundle in oil, might they not at least create an airpocket in this advance? Uh oh, as hedge funds they might even turn on oil and start pounding it into the ground (bad pun).
I think the author's point of view might be expanded by considering what could happen to the oil market if demand dropped significantly due to these higher prices and production increased by a couple of %. We might be looking at lower prices before much higher ones.
As far as OPEC goes, the ones most likely to shut in production are the Saudis and they are pushing for lower prices (or so they say) because they are concerned about longterm drops in demand and development of alternative energy sources.
In any event, $140 oil has focused everyone's attention on our energy future far better than any Earth Day observance to date.

Petrobras: Extremely Overvalued

The author provides a reasoned and professional explanation of his opinion that the fundamentals do not support the price of PBR at this time. This type of analysis is welcome and appreciated as are the ensuing comments both pro and con. There are any number of intelligent, knowledgeable investors who come to opposite conclusions regarding this stock and many others. The dialog is impressive and all of you deserve kudos for your efforts. As far as any blogger promoting an position see Barton Biggs' book "Hedge Hogging" - this is a common practice among big time hedge fund players and is much like our conversations here, (although we have no way of knowing if someone is sandbagging. Certainly the author represents himself well and if someone sees the value of his ideas and subscribes to his research, well its a free market and the market is the final arbiter.

In Light of Peak Oil, Financial Diversification Is a Bad Idea

To richjoy - amen. the consequences of being wrong are so enormous that unless you have a printing press in the basement it will change your life for a long time. Diversification with money you cannot afford to lose is crucial.
BTW, given $875+ gold and $120+ oil, why aren't interest rates on long UST bonds way, way higher? One would think the bond market is forecasting a recession/depression. If that happens, where do commodity and overall stock prices go?






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In Light of Peak Oil, Financial Diversification Is a Bad Idea

My meandering Vietnam era mind wondered if the real reason we went into Iraq was not to take over the oil (although the mega embassy argues against that) but to disrupt the oil flow. It seems the insurgents do a pretty good job of keeping the Iraqi oil flow limited and the Saudis do a pretty good job of keeping supply shut in. Of course, having a real fighting force of 140,000 +/- American soldiers keeps the Iranians at bay for the time being - it seems to me thats why we put Saddam in there in the first place, to keep the Shiites out of Saudi. Anyway, oil sure has had a nice run since the beginning of the Iraq war and a couple mbd shortfall has kept the price up up up. We might now be seeing some actual elasticity of demand and less consumption as unnecessary usage is voluntarily foregone. W, as an old erl man, has probably secured his place as the greatest president of all time as far as the oil patch is concerned. McCain says we'll be there a good long time so I would expect he will get lots of contributions from the oil folks. This has worked out better than they could possibly have anticipated.

Fast and Easy Fannie

Thank you! Sometimes the facts are beyond our comprehension.
A friend was here a few weekends ago who was in the banking business in the bad old 80's when loans require something like 20% down and documentation and oh by the way, it was a local bank that knew you and your Mom so they had a good idea if you were good for the dough. How things have changed!

7 Reasons March Was Not the Bottom

Good post engineer1 - maybe ebay will pick up some of the items to be liquidated.

Is General Electric Overvalued?

Golly. I guess I would rather read an opinion that is "not well written" and have it be right than all these beautiful reports that are so very wrong. I give you credit Mr. Marshall and I do intend to read all of your other pieces.

Gold: The Last Cheap Asset Class

A couple of comments from one who was there in the deep dark mysterious past of the 70's and 80's:
In addition to the reasons eric hart has given, I believe another reason gold was in a trading range for so long was the increase in production due to the cyanide heap leaching of low grade deposits like Round Mountain in Nevada and the rest of the world. Combined with declining inflation from the high rates of the late 70's and early 80's, the economy made a "soft landing". A lot of commentators thought we were going to have "hyperinflation" ala Germany of the 20's or a "deflation" like the 30's. Instead we had 20 years more or less of "prosperity". We were amazed by Volcker and Greenspan and their ability to blunt the business cycle. Economic contractions seemed fairly short and contained. (Though I do seem to remember a big real estate crash in 80's and early 90's caused by a change in the tax code but lo and behold the RTC cleaned things up and everything was good).
So here we are today and everyone hopes the Fed and the Treasury (and JPM) can clean things up again. Maybe gold over $1000 says they can't and gold falling below $900 says they can.
As someone who has been out of touch with investment markets for quite awhile it does seem very odd to have Treasuries at really low rates and gold so high. It's almost as if the Treasury market is looking for a depression and the gold market is looking for major inflation.
Satur9nine brings up a good point. I would answer with something I read years ago in, of all things, Car and Driver. This was in the mid 70's when Mexico was about to dramatically devalue its currency but we of course did not know that. The magazine related a story about a fellow in Mexico City that ordered several $100,000 AMG Mercedes. (Back when $100,000 was actually real money). Who needs 6 really expensive Mercedes?? Anyway, the obvious reason he did it was to maintain purchasing power when the peso was devalued. Evidently when currencies devalue, anything that might have value is bought up and held as a store of value. That is all gold is - a store of value and an imperfect one at that. But I can assure you that you will always be able to buy it or sell it (unless Uncle Sam makes it illegal but that is another story). So gold has not gone up from $300 to $900 - the dollar has gone down.
By the way, for those of you who have studied the past, enlighten us on the bank holiday in the 30's and the outlawing of gold ownership by Americans. The gold price was increased from $20 to $35 which apparently was how the money supply was increased in the old days. That seems so arcane - now we can create billions with the click of a mouse!