Wednesday, June 3, 2009

Goldfinger and GM

In the 3rd installment of the Sean Connery era of Bond films, he matches wits against the title's antagonist, Auric Goldfinger. Along the way, we are confronted by some of the best character names in movie history, Pussy Galore and Oddjob. Goldfinger's master plan is to irradiate the gold supply at Fort Knox, thereby rendering it useless for decades and making his pile of gold worth a fortune.

While Goldfinger was thwarted by Bond, we are seeing market antagonists place their bets against Big Ben and his central banker oligarchy in the form of gold purchases. As I previously mentioned, John Paulson and David Einhorn have purchased hundreds of millions of GLD. This week, Northwestern Mutual (yes, the life insurance company), announced the purchase of $400 million of gold as a hedge against declining assets. Doesn't sound like these guys are betting on this rally lasting, more like betting against the success of the printing press.

Throwing his hat into the ring this week is Nassim Taleb. The hedge fund he advises is creating a "hyperinflation fund." "Universa’s bet on inflation means investing in commodities like crude oil, corn and copper, according to the WSJ, as well as options on stocks like oil drillers and gold miners. It also means, perhaps crucially, shorting US Treasuries at a time when the Fed is actively trying to boost their prices in a bid to stave off deflation."

Anybody else appalled that our country's markets celebrated the official demise of GM with a 220 point gain? Hey, I know this means tens if not hundreds of thousands of people just lost their jobs or had their pensions pissed down the drain, but our crystal ball is now clear for market gains. Well, maybe not so fast. The 30-year mortgage has risen .32% in the last 3 days, and actually getting a mortgage anywhere near that means paying points. Bernanke climbed out of his hidey-hole today to inform Congress that there's a lot more money out there all of a sudden, and maybe you should start thinking about how to reign it in eventually (has he tipped his hand on inflation?). The ADP jobs numbers were worse than expected, as if half a million people losing their jobs every month is good news anyway.

Banks raising capital on a daily basis, large insurers issuing profit warnings, airlines with diminished load factors, gas rising 20 cents every two weeks, stellar retailers like Williams- Sonoma having negative quarters, and Bernanke evading questions on Capitol Hill. Remind you of anything?

http://ftalphaville.ft.com/blog/2009/06/01/56441/taleb-goes-long-inflation/?source=rss
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajf0L9wTPq6Y&refer=home
http://www.marketwatch.com/story/retail-stocks-fall-williams-sonoma-swings-to-loss-200963101400

1 comment:

Tiger Coach said...

Ax... Computer has been down. I tried to call you with a tid bit of helpful info.


Maybe it is time to pile back in to vgpmx....

SLV still attractive.

Always remember, the US govt.'s secret weapon in inflation. And it can be spread everywhere including equity prices....

BD