Hedge fund makes headlong rush into gold

[SlowDownFast]

Hedge fund makes headlong rush into gold

ANDY HOFFMAN

From Wednesday's Globe and Mail
March 18, 2009 at 1:00 AM EDT

Investor John Paulson, whose hedge fund made billions betting against subprime mortgages, is making a massively bullish call on gold.

Paulson & Co. paid $1.28-billion (U.S.) yesterday for an 11-per-cent stake in AngloGold Ashanti Ltd., one of the world's largest miners of the precious metal.

The deal is just the latest example of a major international investor buying into bullion as a safe haven amid the global financial crisis.

As the economic meltdown has worsened in recent weeks and months, firms such as Eton Park Capital Management LP, Greenlight Capital Inc. and Hayman Advisors LP have been boosting their exposure to the yellow metal. The investment funds are turning to gold as central banks around the world continue to print money in hopes of stimulating economic growth.

While it has yet to happen, many believe that the monetary stimulus efforts will cause a spike in inflation. Gold is traditionally seen as a hedge against price increases and declining currency values.While it has yet to happen, many believe that the monetary stimulus efforts will cause a spike in inflation. Gold is traditionally seen as a hedge against price increases and declining currency values.

more:
http://business.theglobeandmail.com/servlet/story/RTGAM.20090317.wrgold0318/BNStory/energy/home?cid=al_gam_mostview

Spot gold currently pushed down to $886, silver to $12.16 today.

For those who have been looking at possible entries in physical precious metal bullion, now is perhaps a decent time, IMO.

I recommend

www.apmex.com

www.tulving.com

www.golddealer.com

I have dealt with all 3 successfully and they all have a great rep among "goldbugs".

FYI.

[serrano2008]

1. Who was asking about what the next bubble would be?

I think we've found it....

Everybody should hold off on their gold purchases for 3-5 more years when it's back down below $400. Then hold it for 15-20 more years until it more than doubles again.

[SlowDownFast]

3. Your economic picture is dyslexic.

It is the US dollar and US Treasuries that is experiencing the bubble.

That bubble will have it's breaking point in the not-so-distant future. Inflation will follow the current deflation we are experiencing. China (as well as other countries) is already expressing major fear of being stuck in US Treasuries when this happens.

China slows U.S. Treasuries purchases
http://www.upi.com/Top_News/2009/03/18/China_slows_US_Treasuries_purchases/UPI-64951237386500/

Wen's US Posturing Doesn't Matter - Yet
http://blogs.reuters.com/great-debate/?p=2520&preview=true



3-5 years from now, you might be lucky to purchase a loaf of bread for $400. Now, that may be an exaggeration, but that is the concept with real inflation. Look to Iceland or Zimbabwe as an example.

Caution on Quantitive Easing
http://market-ticker.org/archives/878-Caution-On-Quantitative-Easing-QE.html

There will be a time to exchange gold/silver for "another currency", but that will only come when things start to stabilize - which we are nowhere near. Gold is the currency of last resort.

I'll be thinking to sell/trade mine when the Dow Jones and gold are near parity. If the dollar is still looking crippled at that point, the trades will be for "stuff", or whichever foreign currency looks to be holding it's own.

It's never a good idea to have all your "eggs in one basket", but having a certain amount of gold/silver could be excellent protection in this environment.

[serrano2008]

10. Uh oh...Freeper alert! Did you get extra pepperoni's this time?

huh huh....huh huh...

[SlowDownFast]

12. Careful who you're calling Freeper, you Newbie Fuckwit. n/t

[FlyingTiger]

15. You think he's a Freeper because he sees the dollar bubble?

Do you know... well, anything at all about currency and foreign reserves?

[Po_d Mainiac]

14. Hey.... shit for brains (that's what "serrano" translates to)

What's the matter with your rational.....Ow I get it now REALITY!

What a puke....

[tabatha]

2. I think Thom Hartmann said it is a different Paulson.

[SlowDownFast]

4. Oh well, I tried.

Gold was $886 when I posted this thread.




Fed just announced they will commence printing.

[girl gone mad]

5. The market is responding to the FOMC announcement.

It's the same reason the Dow started rallying.

[SlowDownFast]

6. Fed to create money out of thin air.

Fed to Buy $1 Trillion in Securities to Aid Economy

http://www.nytimes.com/2009/03/19/business/economy/19fed.html?_r=1&hp

This is what I was talking about.

The dollar is going to crash and burn.

TNX - 10 year Treasuries cliff diving right now:

-15.65%

http://www.marketwatch.com/quotes/tnx

[A HERETIC I AM]

9. You're aware that ten year quote is yield and not price, right?

The price of a Ten Year Treasury bond went up by over $40.00. (+4-02)

That's hardly "cliff diving".

Yields are down because demand is up, driving the price up. Read into that whatever you care to.

[Po_d Mainiac]

11. It's called playing chicken with the Fed

The bond market is in a Hummer and "Deer in the Headlights" Ben is in a rusted out VW bug. Hence the reason the Fed didn't actually make the buy.

[clixtox]

17. I don't think the Treasury can sell 1 Trillion$ to any investor, that's why...

the Federal (just like FedEx is federal) Reserve Bank is printing enough to buy these shaky "investments".

Considering the increasing risk for US Treasury debt, now openly discussed by the T-bond/note/bill holders in China and elsewhere, and the current low yields, who else but the already skewered USA tax-payers (and their progeny in perpetuity possibly) can be stuck with this additional debt load, who is going to notice another trillion...

The small amount of stimulus engendered by the Federal Government spreading the money around, considering their priorities, is just a temporary bonus.

There are going to have to be much more radical (fundamental) changes to the whole USA money creation and management apparatus.

The current system has gone down the drain but with band aids, duct tape and a complicit pseudo-optimistic media the desperate reality teeters.

When it collapses I hope that enough sheeple will have some idea about what went so horribly wrong.

What happened?

[Kip Humphrey]

7. So my gemstones have tripled in value in the last year. If I had invested in gold instead, I could

claim no losses, maybe even a small gain. FYI, gemstones (excluding diamonds) are intrinsiclly valuable, unregulated, untraceable, and are historically used as an inflation/depression hedge similar to gold, except governments don't manipulate the gemstone market.

[Adsos Letter]

21. I thought the diamond market was manipulated by restriction.

I thought the market value of diamonds was manipulated through artificial control of supply?

[truebrit71]

8. I can second one of your recs

.. I have used apmex.com and been very happy with pricing and shipping...

[GoesTo11]

13. Gold is the only reliable investment, and at this point it's close to a sure thing

I recommend buying gold.

[upi402]

16. You need to spend $20,000 at Tulvig minimum

"Our Minimums Are 20 ounces Of Gold And 500 Ounces Of Most Silver."
I'm out!

[SlowDownFast]

19. You can buy an ounce at a time via Apmex.

They have no buying minimum.

Golddealer.com (California Numismatic Investments) has a $2000 minimum purchase, I believe.

There are fractional ounce (1/2, 1/4 and 1/10 oz) Gold Eagles, but they are becoming increasingly hard to find anywhere.

When looking to purchase, my advice is to stay away from "numismatic" coins - you want bullion that is as close to "spot" price as you can get. The inflated premiums you pay for "numismatic value" might not mean shit if things go seriously downhill and the time comes for you to trade or sell your metal. On the other hand, there is the "gold confiscation II" theory, in which only numismatic coins were the exception (as "collectables") to the "confiscation" of gold during the Great Depression. I don't buy it. If they try it again, I don't think that gold-owning citizens will trade their gold back to the gov't for dollars quite so easily this time. If it comes to that, things will indeed be dire and there will most certainly be a black market on everything, not just gold. Plus, I just don't think the gov't will go there - the dollar is no longer "backed by gold" and the physical gold market is invariably smaller now than it was then. There's lots of debate about this all over the web - do some Googling.

[upi402]

22. Thanks, yes and Kitco was fine for small amounts.

I've been a frustrated gold bug for too long. I wish I didn't listen to "calmer voices" when I saw this in the pipeline. Now I want to know if I can get my pension money out at all and buy Maples. 75% is better than nothing. Any thoughts are welcome. I never considered it until I saw Obama's team being chosen.

[my2sense]

18. Self Delete

[Po_d Mainiac]

20. I'm surprised that no one is mentioning silver.

Esp. pre 64 90% coins and newer issue .999% rounds. If things deteriorate to a barter based economy, it will be a hellova lot easier to deal with the smaller denominations.

There is also the numismatic value u can stumble into.

Depending on your available cash, u can buy silver coins through eBay at current to near current wholesale levels, and that's factoring in the freight charges. YMMV

[trof]

23. Yeah, I've read the historic silver-to-gold ratio is way out of whack.

Supposedly silver is way undervalued compared to gold.
Or gold is OVERvalued?
:shrug:

[Po_d Mainiac]

24. interesting question

I gave up on the so-called historical 15-1 ratio years ago. That would've put silver melt at $63 + change at the close Friday. 50-1 has been holding fairly steady for years. At that ratio, current silver melt should be around $19 instead of the paper trades of $13.73 at the close 3/27

On appearance, one would make the assumption that silver has room to climb. But at this point in time, I believe more people are interested in maintaining the portfolio, than expecting growth. My post was meant to offer an alternative to gold, for wealth protection. No more, no less. If you do want to think of silver as an investment, history and comparison charts would indicate there is more room for up, even if gold flattens. At 50-1, if gold drops to $700, silver still has a small gain left in it.

If you are of sound mind, it's hard to deny that QA = inflation. Last week we got QA

How do you hedge a certainty? Personally, I believe that's best accomplished with something that stands a decent chance of following the same curve. What many are racing to, is the yellow metal. But the white metals deserve a little respect also.

YMMV