Exclusive: The Paulson Portfolio Post-Mortem (In Which We Learn That The Maestro Himself Is Advising J.P. On Future Gold Prices)

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Sun, 09/05/2010 - 23:53 | 565403 Calvin Jones an...
Calvin Jones and the 13th Apostle's picture

Sounds to me like Paulson is betting on Bernanke and Brian Sack to peddle that hamster wheel faster and faster.  How big of a bet is he making short wise?  Hmmm.

Mon, 09/06/2010 - 00:45 | 565455 Oracle of Kypseli
Oracle of Kypseli's picture

Paulson is now part of the oligarchy. There is no way he would go against the trend. Firstly because Bernanke will burn any heavy short sellers and secondly, he can not stay idle. Therefore, he has to go long in some way with the wind of the Fed behind him.

He and other elite hedge funds, bond pedlers and quasi-banks are on quid pro quo with the Fed.

They have to be. It is a survival symbiosis.

Either they all go down with the ship, or the fed survives and they make tons of money.

Fight back. Get out of stocks and bonds and stay 70% cash 30% PM's.

Okay you want the action for your daily dose of adrenaline. Yes? Then take 5% of your assets and gamble. 

 

Mon, 09/06/2010 - 01:47 | 565484 Spalding_Smailes
Spalding_Smailes's picture

This market is oversold.

Bonds & PM are going to tank over the next 3 months.

 

Oil at $120.00 by 4th quarter 2011

Exxon Mobil is a steal at $61

 

 

Mon, 09/06/2010 - 08:32 | 565602 Monkey Craig
Monkey Craig's picture

+1 on the XOM call. However, there is a bull case for gold/lead/silver. I'm sure if you spend enough time on this site, it will be crystal clear. My suggestion is to read Turd Ferguson and Cognitive Dissonance.

cheers

Mon, 09/06/2010 - 08:56 | 565612 done with them all
done with them all's picture

I agree, all metals are becoming more important including lead

TD & CD are spot on

Mon, 09/06/2010 - 12:12 | 565815 FranSix
FranSix's picture

The 5-year lead chart shows lead down significantly off its peak at the start of 2008 from ~$1.75/lb.

If lead were to rally past ~$1.85 today, then it would merely have kept up with inflation from that time.  That means an 85% rally from friday's close.  Considering that there is no debt bubble being inflated any longer, and that commercial banks are off-loading their proprietary trading monopolies on commodities futures, I would say that likelihood of that happening is pretty slim.

http://www.kitcometals.com/charts/lead_historical_large.html#5years

(using Tom's Inflation Calculator  http://www.halfhill.com/inflation.html )

Mon, 09/06/2010 - 12:32 | 565849 Spalding_Smailes
Spalding_Smailes's picture

Inflation, what inflation ...

 

 

Wal-Mart Quietly Raises Prices
August 10, 2010

Wal-Mart Stores (WMT), which for years has touted its prowess at lowering prices, has been doing the opposite as it tries to bolster its bottom line amid stagnating sales.

A JPMorgan Chase (JPM) study of a Walmart Supercenter in Virginia found that the world's largest retailer has raised prices by nearly 6% on average over the past six weeks, according to the New York Post. Reuters says it was the biggest sequential increase since JPMorgan started the study in January 2009.

Some Prices Hiked Over 60%

Some of the price hikes were considerably larger. For instance, the price of a 32-ounce bottle of Windex household cleaner jumped 50%, a 12-ounce box of Quaker Oats instant grits climbed 65% and a 50-ounce container of Tide detergent rose by more than 50%.

Mon, 09/06/2010 - 13:01 | 565900 FranSix
FranSix's picture

You can get some inflation in a depression, though I presume its comes through the formerly subsidized retailer/airline operator/food distributer as all of these have been backed up with either municipal or state subsidies.

As long as the discount rate remains stubbornly  below 0.5% because of overwhelming demand for short term treasuries, then any notion of reflating debt and thus prices in commodities has to take a back burner, simply because the same rate of lending to game the commodities is completely gone.

TIPS yields are going lower, which means inflation is very muted.

http://blogs.reuters.com/felix-salmon/2010/08/11/chart-of-the-day-tips-y...

Mon, 09/06/2010 - 13:26 | 565951 Spalding_Smailes
Spalding_Smailes's picture

High energy import prices, rising capacity utilization and velocity of money, all will push inflation going forward. As oil moves higher this will also have an influence ...

 

Consumer purchasing power fell hard in the early 70's just before inflation came home to roost' ... same thing is playing out now.

Mon, 09/06/2010 - 13:38 | 565969 FranSix
FranSix's picture

Its a difficult call to make, for sure, since Merril Lynch lost money betting on rises in interest rates.

By my book, I would say not all equities will rise, but only those expected to see improved fundamentals, which so far has not occurred.

And, as an addendum, currency swings will catch most by surprise, such as a Yen melt-up, as has the Swiss Franc  melt-up, or possibly a modest Loonie meltup.

Mon, 09/06/2010 - 13:21 | 565942 apberusdisvet
apberusdisvet's picture

Inflation at the grocery store is at least 20% YOY; check out your receipts.  Many manufacturers are downsizing containers but keeping the prices the same.

Mon, 09/06/2010 - 13:32 | 565954 Spalding_Smailes
Spalding_Smailes's picture

Stealth inflation ... harbinger of things to come.

 

Mon, 09/06/2010 - 13:56 | 565999 Cruel Aid
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The products have been downsizing for a while (deodorant, TP, soap) and they can no longer go that route and if our most efficient discount retailer is stagnating, what does that say about the consumer at U6=20%. They are at, what, 1/3 of their work income.

Can they pull this off without consumers? How is inflation going to make it better by itself? By making the homeowner feel richer. This route is going to take forever or end abruptly.

High speed train/brick wall of gold... coming to a Qtr near you.

 

Mon, 09/06/2010 - 12:41 | 565861 goldsaver
goldsaver's picture

I think he meant copper clad, expanding gas propelled kind, not the monfilament launched, underwater kind

Mon, 09/06/2010 - 12:42 | 565865 amusedobserver
amusedobserver's picture

I suspect they weren't talking about investing in lead in commodity form...

Mon, 09/06/2010 - 18:58 | 566343 robobbob
robobbob's picture

I think the type of lead most people on this site are referencing comes prepackaged in 138gr and comes with an attractive brass display stand. Cost varies but $390/case is in there.

It is usually purchased as an insurance product for your Au and Ag holdings than as a straight play itself. While subject to violent price upswings on the slightest negative rumor, it is virtually impossible to get anyone to part with holdings except in the most dire circumstances.

Mon, 09/06/2010 - 21:14 | 566445 Seer
Seer's picture

And for further clarification, not all projectile-based lead is copper and brass adorned.  I'm old time, and don't need that fancy, expensive stuff.

Mon, 09/06/2010 - 08:47 | 565607 taraxias
taraxias's picture

It sounds like you're in for some major hurt the next few quarters, but good luck to you anyways.

Mon, 09/06/2010 - 10:09 | 565660 NoBull1994
NoBull1994's picture

Be careful with XOM.  While I agree with you that oil is likely to inflate, and probably hyperinflate, XOM may not perform as expected due to gov't regulation, taxation, etc.  Better to own the commodity itself.

Mon, 09/06/2010 - 13:06 | 565912 pitz
pitz's picture

Yup, the real gains will be in the upstream part of the O&G industry, one in which ExxonMobil doesn't participate in heavily, relative to the downstream (ie: main street) part of the business, in which, XOM is fairly dominant and recognizable.

The best gains will be in those who own physically producing assets.  Not refineries (which, as oil depletes, will suffer increasingly low profit margins and decreasing utilization!), not retailling/marketing.

Mon, 09/06/2010 - 13:47 | 565985 amusedobserver
amusedobserver's picture

Exactly.  XOM supplies only 60% of the oil it refines internally.  The other 40% is bought on the world market at high prices.

Mon, 09/06/2010 - 18:31 | 566091 Spalding_Smailes
Spalding_Smailes's picture

XOM has some great qualities ... China's voracious appetite for black gold will help drive oil....

Minimal use of corporate debt

ExxonMobil’s second quarter 2010 earnings were $7.6 billion, an increase of $3.6 billion from the second quarter of 2009

ExxonMobil completed the merger with XTO Energy Inc. Through this transaction, we have acquired a resource base in excess of 45 trillion cubic feet of gas equivalent at a cost well under $1 per kcf equivalent.During the second half of 2010, we plan to further increase activity in Haynesville, Fayetteville, Marcellus, Eagle Ford, and Bakken shale plays.

ExxonMobil reached a significant milestone in the expansion of our integrated chemical and refining complex in Singapore, with the arrival of seven world-scale furnace modules.

Combined with ExxonMobil's state-of-the-art proprietary technology, these furnaces are part of a feed-flexible steam cracker that will have an ethylene production capacity of 1 million metric tons per year. In addition, the expanded complex will produce a range of premium products to capture demand growth in Asia. The anticipated mechanical completion and startup activities will be phased in beginning later this year and continuing through 2011.

Mon, 09/06/2010 - 12:38 | 565857 Johnny Bravo
Johnny Bravo's picture

Oversold based on what?

We've already had a rally that has taken the Slow STO on the monthly chart to nearly overbought territory.

STO on weekly and daily, and lesser charts is already showing a topping motion.

I think we can run higher, but not that much higher.

Mon, 09/06/2010 - 16:20 | 565980 Spalding_Smailes
Spalding_Smailes's picture

Oversold ...

Long term for high quality stocks. XOM, NO, GOOG, Infosys the list goes on ...

I just think you can invest in some great companies now and at the end of 2011 people will have wished they had bought at today's prices...JMHO

 

Mon, 09/06/2010 - 23:21 | 566522 pitz
pitz's picture

GOOG a high quality stock??  LMAO!

Mon, 09/06/2010 - 13:17 | 565930 Hephasteus
Hephasteus's picture

Computer industry, household goods, maytag etc will be a smoking pile or rubble by the end of the year. Bonds are going to tank, pm's aren't. Oil will yo-yo.

Mon, 09/06/2010 - 21:20 | 566450 Seer
Seer's picture

Oil will plummet in the short-term, driven down by a further contraction in the credit markets.  Once the financial sector lay in smoldering ruins Then oil will shoot up; but, most people won't be able to affort it, in which case it'll be the rich making the big bids for falling production (and rising production costs due to reduced economies of scale and political instability).

Food prices will go up to their more historical norm.  Disposable income items will drop off a cliff.

Tue, 09/07/2010 - 00:24 | 566672 Hephasteus
Hephasteus's picture

Makes good sense. Majority of oil usage is in construction and destruction. I can see it tanking back to 30 or 40 but they would shut down production so hard and fast it would make your head spin.

Mon, 09/06/2010 - 08:41 | 565605 russki standart
russki standart's picture

I agree with most of your portfolio positioning. I beg to differ, however, on motivation. At the level of game played by Paulson and the Maestro, they are representing the true controllers of the economic system.  Hence, they are motivated by power and control, not by money since they can print billions at will. If it serves them, they will destroy the system to keep control. Since I see this as a good possibility, I am positioned in gold and certain non monetary assets.

Sun, 09/05/2010 - 23:54 | 565407 Calvin Jones an...
Calvin Jones and the 13th Apostle's picture

Is that a good or bad sign that Paulson hired Greenspan?  Wouldn't Kudlow have come cheaper?

Mon, 09/06/2010 - 00:05 | 565427 RockyRacoon
RockyRacoon's picture

Kudlow on has one hammer:  The supply side tax cut.  He'd remove every tax (except yours and mine) tomorrow.  Dangerous man!

Mon, 09/06/2010 - 12:41 | 565860 Johnny Bravo
Johnny Bravo's picture

Cutting taxes worked SO well at creating jobs and preventing the recession, that there's no denying he is right!

/sarcasm

Meanwhile, the most jobs created in the last 30 years came after raising taxes.  (which GHWB did, which led to the Clinton boom)

Mon, 09/06/2010 - 13:01 | 565897 Spalding_Smailes
Spalding_Smailes's picture

Clinton boom was driven by the stock market (14 trillion increase in stock holdings over the last decade) , Telecommunications Act of 1996, and NAFTA ..... plus racking up a record, economically unsustainable trade deficit for the United States.

Mon, 09/06/2010 - 13:49 | 565988 Johnny Bravo
Johnny Bravo's picture

And then we cut taxes for the rich, much like Reagan did in the early 1980's, and the economy = fail.

If there's one lesson we should learn from the last 30 years it's that tax cuts for the rich and bank deregulation lead to real estate bubbles.

This happened in 1987, and again in 2007.

Both policies were resolved with bank bailouts, stock market crashes, and recessions!

Bush's was just on a much larger scale though.

Mon, 09/06/2010 - 14:51 | 566087 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

and bank deregulation lead to

Rubin under Bill , is a blow job from my daughter incest?, Clinton allowed the bank deregulation to happen that brought us the GFC.

Mon, 09/06/2010 - 14:58 | 566105 SWRichmond
SWRichmond's picture

How about tax cuts for everybody?  Would you be in favor of that?

Mon, 09/06/2010 - 15:29 | 566139 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Where do you trade? I would like to invest in you and your ideas. Would you please post information about your business?If you do not have these resources please go the  Democratic Underground and troll for Obama bj's.

Mon, 09/06/2010 - 11:45 | 565782 thesapein
thesapein's picture

But Paulson hired Greenspan, like, over a year ago, at least. Why are we just now talking about it? I suppose we had to wait to see what kind of returns they could produce together with twice the insider knowledge.

It's a good sign for goldbugs when insiders show their hand and it looks like they're going for a royal flush, if you know what I mean.

Sun, 09/05/2010 - 23:55 | 565408 Conrad Murray
Conrad Murray's picture

This reinforces my suspicion that the Maestro set out to destroy the fiat system on purpose.  That is one sly dog.

Mon, 09/06/2010 - 00:34 | 565451 JLee2027
JLee2027's picture

An interesting thought.

Mon, 09/06/2010 - 00:58 | 565465 Conrad Murray
Conrad Murray's picture

I mentioned this in the comments of another article because I have always had trouble reconciling the man's actions with his thoughts in "Gold and Economic Freedom" - http://www.321gold.com/fed/greenspan/1966.html

Another reader replied and gave me this very interesting link: http://www.roadtoroota.com/public/190.cfm

Mon, 09/06/2010 - 01:45 | 565476 DavidPierre
DavidPierre's picture

Bix Wier and his Road to Roota series has been highlight by Bill Murphy on www.lemetropolecafe.com over the past years.

Bix has a very interesting take on the Fed and is well worth the time and effort necessary to understand his thesis.

It is only lately that he seems to be gaining some traction and getting his ideas out to a wider audience.

It would be a very educational read for our young friend {and all around pain in the ass}, JohnnyBravo, to read and understand.  After all it is based on a comic book.

Hey...Nothing wrong with comics!

Maybe Paulson hired GreenScam for a very good reason. 

I am sure Bix will have lots to say on this.

GO GATA !!! 

Mon, 09/06/2010 - 07:16 | 565578 Treeplanter
Treeplanter's picture

Go GATA!  But Road to Roota is a mix of excellent conspiracies with a great deal of BS tossed in.  The lizard people from Sumeria is more plausible.

Mon, 09/06/2010 - 11:29 | 565759 zaknick
zaknick's picture

Reptilian BS? Think again:

 

http://www.youtube.com/watch?v=Eaaubr3nnHI

 

How the hell do u explain that????

Mon, 09/06/2010 - 11:57 | 565799 thesapein
thesapein's picture

Explain what? Am I supposed to drop acid before watching it or something?

Mon, 09/06/2010 - 13:04 | 565905 zaknick
zaknick's picture

Dude, watch his eyes!!!

Mon, 09/06/2010 - 15:16 | 566124 Dismal Scientist
Dismal Scientist's picture

I suggest you climb back into your bed, pull the covers up and cower before the Lizard People chill your blood permanently.

Mon, 09/06/2010 - 18:17 | 566303 knukles
knukles's picture

So whadda we supposed to do?  Buy gold and eat reptile sausage?  These people are fucling crazy.  Give Gold Bugs a bad name for Keerist's Sake.
Take some Valium and have the Implant Pried Out.

Mon, 09/06/2010 - 16:12 | 566189 Treeplanter
Treeplanter's picture

HQ of the Lizard People is the Orleans Casino on Tropicana, a few blocks west of the Strip. You can tell by the many alligators roaming the place.  Everywhere you look.    However, it has the best food for the price in LV, big truck parking, and the crap tables are always busy.  The place is crawling with Templars, Masons, Illuminati, Council on Foreign Relations wonks.  The tell?  NO REPTILES ARE SERVED ON ANY MENUS IN THE CASINO.  I checked.

Do NOT follow this link or you will be banned from the site!