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  • A Goldman Bet That May Sink The Ship [View article]
    Biriniy and Wien are 100% bullish 100% of the time. They are like broken clocks. GS is not that stupid, that is for sure. I think that GS is bullish on some commodities because they think that QE3 is coming, which is very likely I think. I think that their research is one thing and their positions are a different thing. Research, generally speaking, is for the muppets. I think that the investment banks are in trouble because activity in the markets has collapsed and they are going to end up firing a huge number of people and yes GS too.
    Jun 11, 2012. 04:13 PM | 8 Likes Like |Link to Comment
  • Focus On Total Debt Misplaced; Moral Hazard Problems Misunderstood [View article]
    I like the idea of world bonds. I think that this is a great one. We'll issue world bonds and sell them to naive aliens. Then we are going to pay them with printed money but impose intergalactic currency/capital controls so we don't get any inflation at all. Problem solved!
    Jun 11, 2012. 04:08 AM | Likes Like |Link to Comment
  • Focus On Total Debt Misplaced; Moral Hazard Problems Misunderstood [View article]
    I assume the author has a Ph.D. in Keynesian economics. This is the useless theory that says that debt can be cured with more debt and money printing. Unfortunately it doesn't work that way.
    Europe (at least Germany) is trying to do the right thing by cutting budget deficits. This is the only way to save the EUR. Are they going to succeed? That remains to be seen. However, cutting spending and restructuring the economy is the right way to go. This was successful in Germany and also places like Estonia.
    Jun 10, 2012. 03:21 PM | 5 Likes Like |Link to Comment
  • Silver Forecasts: Truth Vs. Noise [View article]
    Inflation/deflation and so on, the argument goes on and on. I think that the one thing that everybody should do is look at history and understand what happened in the past when similar economic and financial conditions prevailed.
    If you look at history, you will see that the only possible solution is inflation, unless we see a wave of defaults, including government defaults in G7 countries. My best bet is that the politicians would most likely opt for inflation - this is the path of least resistance.
    How high is that inflation going to be? We don't know as all that depends on what combination of belt tightening and money printing wins the day. Of course, if things continue the way they are now, we are going to see very high inflation as there is no belt tightening and debts keep growing. More debt implies more QE (money printing) and more QE implies more inflation. It is as simple as that.
    Jun 10, 2012. 03:11 PM | 4 Likes Like |Link to Comment
  • Silver Forecasts: Truth Vs. Noise [View article]
    I am very bullish on silver long term. I have a couple of remarks starting with one regarding supply/demand which is actually negative when compared to what the article says. Silver mined in 2011 was 761 million ounces. Silver used in Fabrication was 876 million ounces but of that 118 million ounces was used to produce coins and medals. I think that coins and medals are used for investments mostly so industrial demand was really 758 million ounces. This is ~ equal to the amount mined.
    Now come the positives:
    - The value of silver mined in 2011 was ~$21.5 billion, at current prices. Compare that to a budget deficit of the USA for only 1 week of $25 billion and keep in mind that other governments also run deficits. Given that silver was the money of many great empires (the Roman empire was one), silver seems massively undervalued.
    - 282 million ounces with a current value of ~$8 billion was the total net investment in silver in 2011 (including coins and medals which I count as investments). Compare that to the ~$1.9 trillion created by the FED with a click of a mouse since 2008 increasing M0 money supply from ~$800 billion to ~$2.7 trillion. Looking at it this way, the amounts invested in silver are tiny. This is why silver may outperform gold on the way up (if they go up) because if gold gets too expensive, the poor man's gold will be in high demand.
    - $256 million ounces of old silver scrap was supplied in 2011. I assume that most of it came from cash scrapped families in places like the UK and Italy. This is basically people selling their family silver, quite literally. This supply is not going to last as the ones that are desperate are going to run out of silver.
    - Trading on the COMEX. While there are arguments both ways, judging from the action at the exchange and also the fact that the CFTC is taking years to come out with a statement on silver manipulation, I believe that the market is heavily manipulated. This simply implies that silver prices are lower than fair market prices. So, silver is undervalued and it is wise to buy cheap things (like silver) and stay away from expensive ones (like FB).

    There are new applications of silver in industry (for example medicine) that over time are going to grow the industrial demand. Silver prices need to adjust higher so that the small amounts of silver used in things like cell phones can be recycled and used again, which is currently not economical and silver ends up in landfills. Silver will be very volatile (the COMEX will make sure of that) and you need strong nerves to have a position but we are going to see much higher prices over time.
    Jun 10, 2012. 06:26 AM | 10 Likes Like |Link to Comment
  • Silver Surged 3% - ECB At 1%, Dovish Fed Comments And 'Helicopter Ben' Testimony [View article]
    I also think 150 to 200 silver is for sure. The squeeze will be outrageous. The COMEX is going to change the rules and the contracts will settle in cash - no physical delivery.
    Jun 8, 2012. 05:42 PM | 2 Likes Like |Link to Comment
  • "You're never going to ever achieve the necessary pool of money that you need (by) buying bonds," says BlackRock CEO Larry Fink, whose February call to be 100% invested in equities came just about the time it paid to be 100% invested in bonds. The U.S. 10-year yields 1.56% vs. the S&P yield of 2%.  [View news story]
    Fink is a total idiot. He said the same thing ''100% in stocks'' in the spring of 2011 just a couple of weeks before the market collapsed. The guy is just a salesperson - he gets paid when people invest. You can't trust him at all.
    Jun 8, 2012. 05:36 PM | Likes Like |Link to Comment
  • Japan: Not Buying The Debt And Depression Story [View article]
    Japan is not a place where one can invest. Their debt to GDP is over 200% and rising. For now the are surviving that as the population saves and puts money in government bonds, so that the government can spend it on its pet projects - total waste. As the population ages and people retire they will need the money and the government will be unable to finance itself at such low rates and there huge debt would put them in a tight spot. Rates will go up and the politicians will force the BOJ to print money and monetize virtually all the debt. So, the YEN will collapse. This may take time but it is a mathematical certainty given the state of their finances. Also, Japan is an extremely expensive place to do business and virtually anywhere else in Asia an investor has a much better chance. Investing in Japan is crazy.
    Jun 7, 2012. 04:51 PM | 1 Like Like |Link to Comment
  • Silver Vs. Gold: Let's Settle This [View article]
    That will be the case over time (silver going much higher), of that I have no doubt. Let's look at some numbers:
    - Value of silver mined in the entire world in 1 year ~ $ 21.5 billion, at current prices
    - US budget deficit in 1 week ~ $25 billion.
    - 760 million ounces of silver were mined in 2011 and all that silver was used in various industries. Only scrap sales made it possible to produce coins and bars for investment purposes. These are scrap sales from places like the UK and Italy by hard pressed families literally selling the family silver. Over time, this supply will come down.
    - Silver is probably the most useful industrial metal and is used in areas ranging from electronics to medicine.

    The problem with silver is that most silver used in industry (like electronics) just ends up in the garbage as it doesn't make sense to recycle it at current prices. So, it ends up in landfills. Also, 2/3 of all silver mined comes from mines where the main metal is some base metal, like copper. If the world economy slows down and these mines lower production, silver production will drop just as much. So, the supply of silver will come down if we have a global economic slowdown.

    The supply demand picture will push silver much higher over time. It will be super volatile as silver is a small market and banks manipulate it on the COMEX. It is going to be a wild ride and not for the faint hearted. Also, CNBC will always talk it down. However, it has huge potential, a potential that is very likely going to be realized over the next 3-5 years with prices much higher. Remember that QE is the fuel that is going to propel silver to new highs.
    Jun 7, 2012. 04:30 PM | 4 Likes Like |Link to Comment
  • Silver Vs. Gold: Let's Settle This [View article]
    I think that you conclusion is a bit too detailed. There is great uncertainly about exactly what is going to happen. I doubt you can predict with such precision. My targets for gold are $3000-$5000 and for silver $150-$200 by 2015. Is it going to happen? Well, it looks very likely in my opinion but we'll see. Both should do well and I actually think that silver is likely to outperform.
    Jun 6, 2012. 04:35 PM | 1 Like Like |Link to Comment
  • Revisiting The Intrinsic Value Of Berkshire Hathaway [View article]
    Buffett is a big investor in financials. Also, he had written a big put option on the S&P index. As it is, he and all his managers underperformed the general market during the crisis. Imagine what would've happened without all the bailouts. There is no way in hell that BRK would've survived given the businesses there were in.
    Jun 6, 2012. 01:00 PM | Likes Like |Link to Comment
  • Hedge funds have doubled their net shorts of the S&P 500 in the last three weeks, reports SocGen. They're at record highs with euro shorts, and have turned net sellers of copper. "Waning support" makes the S&P and Nasdaq "highly vulnerable," says SocGen. Actually, it's the hedge funds that are vulnerable, writes Brendan Conway.  [View news story]
    I think that the Hedge Funds are going to get screwed if the FED announces a new QE program and that is very likely. They have to staying power and will be covering the shorts if the market moves and I wonder what covering such large shorts can do ... hmmm.
    Jun 6, 2012. 10:26 AM | 1 Like Like |Link to Comment
  • Revisiting The Intrinsic Value Of Berkshire Hathaway [View article]
    This company is run for the entertainment of some old men who just want to be in the spotlight. It has underperformed the market and has really underperformed gold. I am sure you've heard Buffett's rant against gold. No reason to be bullish on BRK but of course they wouldn't do certain stupid things like buying FB.
    BRK would've gone bankrupt without the government bailouts in 2008 and 2009. How are they going to do if there is another crisis?
    Jun 6, 2012. 10:19 AM | Likes Like |Link to Comment
  • The Case For The Dollar: Nothing Has Changed [View article]
    I think that be ''credit creation'' the author means deficit spending or to put in otherwise Keynesian government policies. Of course, the long term effect of these policies are disastrous. Still, they are very much pushed forward by both sides. These policies will push the FED down the path of QE infinity, of that there is little doubt.
    Jun 6, 2012. 10:09 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Well, the defense industry has a very good lobby and both parties go to the defense industry hat in hand. Keep in mind that this industry has huge profits and needs some wars to keep the thing going.
    Jun 6, 2012. 10:00 AM | 2 Likes Like |Link to Comment