Friedberg Mercantile Group Q1 Commentary: Views On Asset Allocation And Gold In A Stagflationary Environment

Tyler Durden's picture

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Racer's picture

Genocidal ChairSatan's trickle down p!ss eCONomy... the final outcome unfolds

slaughterer's picture

Friedberg?  My god, soon ZH will be shining its spotlight on Doug Casey.

Soul Train's picture

Ultimately, the dollar will continue its crash course. And American sheople will wake up, and realize that they need to change the structure of the Federal government somehow. Perhaps segment the country??? Not that big of a deal people.

The Federal Reserve is not a Reserve and is Private. And Americans have bought into the money cartel for almost 100 years! Way to go, JP Morgan, you did a heck of a job pulling the wool over the sheoples eyes.

 

Hey, anybody know what the end game is in Iraq and Afghanistan? It's worse than the Vietnam fiasco, and Americans are so fat and dumb and afraid they'll lose their 401k and McMansions that they have lost their moral compass.

 

Not good.

plocequ1's picture

Too late. Man hasn't found his true character and wasn't able to keep himself from entering the Abyss. There is no turning back. Look to God.

DoChenRollingBearing's picture

+ 2

I completely agree we are in the Abyss, and that we cannot get out.

Probably OK with Him if you help to take care of yourself by buying some gold...

The time to prepare was yesterday!  But, preparing today will be better than waiting around until tomorrow.

nmewn's picture

"Probably OK with Him if you help to take care of yourself by buying some gold..."

+3

The Lord helps those who help themselves.

Hacked Economy's picture

++

Had a spirited discussion here on ZH about a month ago with a couple of other members who were very antagonistic about God even being mentioned on this site.

Tell you what...regardless of what stripe you might be, it's a sure bet that - as the financial house of cards begins to crumble on a large scale - more and more people will be saying...what?...

"God help us!"

web bot's picture

I would agree.

The problem is there is NO solution to getting out of this mess, unless we're willing to contemplate default, or backing away from the world reserve currenty status. Over 50% of US debt is < 3 years to term, so the moment interest rates start to rise, we start to see the federal debt go hyperbolic within a short period of time.

 

Al Gorerhythm's picture

Tell him for me he needs a shit load of money if he wants to join the party and watch out for politicians and merchant bankers. 

Diogenes's picture

They've already lost their McMansions, their 401Ks are going fast and they are still sitting on their ass with their feet up in front of the TV. If they haven't wised up and got mad yet they never will.

Pegasus Muse's picture

The trouble with most of Americans is they are treated like mushrooms.  MSM intentionally keeps them in the dark and feeds them endless amounts of shit.  

If you are not on the internet reading, learning and figuring out things for yourself, you are destined to be royally screwed.  

DoChenRollingBearing's picture

Friedberg covers a lot of turf in his post, and they put money in CDS and other things I would never consider.  So I limit my comment to gold.

I would recommend to everyone to buy & hold 5% - 10% of net wealth in PHYSICAL GOLD.

Dejean Splicer's picture

I would not make that recommendation until Gold hits $3274/oz. My models are telling me that is the best time to buy. But % ownership at that time is more towards 46.7% of total AUM.

Wait for it. It is the tipping point.

~D'jean Splicer

DoChenRollingBearing's picture

I buy gold when I have money come in.  I hardly even care about the price (I do check it to make sure I am not getting ripped off at the coin shop), it has always seemed "expensive" every time I have bought through the decades.

I am not sure I understand your logic of waiting for POG to reach $3274.  Why not front-run that price right now at just under $1500?

Dejean Splicer's picture

Oh, just a little thing called risk reward.

DoChenRollingBearing's picture

Dejean, the Bearing kindly asks you to expound further...  

The risk / reward seems rather good to me here.  Yes, I recognize that the E.E. may bash gold down, but how far?  Not far would be my bet.  The WORST I could realistically see happen would be $1050, the "India Put", the price India paid a year or two ago for their 100 tonnes from the IMF.

U of Texas just took delivery of $1 billion of "physical" gold, although it is not clear exactly how their gold is allocated nor if they can actually extract it out of HSBC's vault.

If/when gold does get to $3274 (or anywhere near), the FOFOA's Freegold may be very near.  The move to $55,000 may be very swift.

The Bearing always likes learning more about Au.  Also 52100 steel.

Dejean Splicer's picture

Dovetail Marty's analysis into your work but be sure to account for .gov intervention as it has blow his work to shreds unless you know what you're looking for, adaptations of Kondratiev wave specifically Juglar's fixed investment cycle.

http://www.martinarmstrong.org/economic_projections.htm

DoChenRollingBearing's picture

Thanks Dejean, I will check out your link.

I like M.A.'s work (been following him for 18 months or so), but it seems, what, too deterministic?  He does have an awesome knowledge of history and monetary history as well.

.gov intervention is a problem no doubt.  I do not know how to factor that in, until I see what they try.  The guru I follow (FOFOA) says that .gov is not likely to try and confiscate gold as they will need private owners of gold to recapitalize our economy.

Granted, there are lots of other ways .gov can interefere with the price of gold.

 

EDIT:

Wow, Martin Armstrong has been prolific since I regularly read him.  Your link provides a vast amount of material, which will take some time to read and digest.  Thanks again for doing the good thing of helping to educate the Bearing.

Dejean Splicer's picture

Right on. But it's not only Marty. Focus on understanding Kondratieff P.R.D.E work and understand how .gov (Keynesian's) alter the natural order of free markets.

Hacked Economy's picture

I tend to lean toward Bearing's method of buying now rather than waiting until it's at least twice as expensive (wink!)

I hold primarily silver (the po' man's white gold), but am seriously thinking about beginning a foray into some of the serious yellow stuff as well.  Won't be a lot, as my finances allow, but we all hafta start somewhere...

Diogenes's picture

If you invest 21.32% of your money in gold now when it hits $3274 it will be 46.7% of your wealth.

dearth vader's picture

What news moved up the yen against gold and silver at 17:12 EST so suddenly, the US$ keeping steady, and sinking the EUR, CAD, AUD and GBP?

redpill's picture

He may make some valid points, but I tend not to listen too closely to financial types who have to start out their letters describing how much money they lost during the quarter.  I can do that very well without any advice.

doggings's picture

I think its par for the course with hedge funds, the good ones just win more than they lose these days. the not so good ones are all gone already, destitute or shut up shop and got out in disgust. 

disabledvet's picture

maybe.  certainly economic growth estimates are being downgraded due to Fukushima and the incompetent response to Libya to date and Europe in general.  I don't see a recession call (yet) and indeed if equity markets are good for anything it's as a predictor of growth coming out of a downturn.  interestingly "i havn't seen much of a recovery" even with a doubling of the S&P which certainly is true in most of the American people's lives as well.  Still it does go to show "you'd better get a lot of deflation in here" if the American people are going to change their views on "how we're doing" since "they all took a pay cut" and "got a phuck you very much" as the economy recovered..."from the recipients of the bailouts" no less.  I'll take the war and the inflation if that's the alternative...and hope that our government will do everything they can to hold on to every benefit possible for the American people--and when I see men like David Petraeus (hopefully next Secretary of Defense) it sure gives me a lot more hope than Jamie Dimon running around saying "tax me!  tax me!" but never saying "this bonus pool is a phucking crime against the American taxpayer."  btw "if there's any hope i saw 100,000 head of beef while driving on i-40 back from Cali" this week.  maybe i will have steak tonight.

LawsofPhysics's picture

We should have been raising rates incrementally a long time ago.  The Fed has now painted everyone in the western world into a corner.  The easy money has to keep flowing for two reasons.  First the "mark to unicorn" accounting becomes more and more shaky as more and more people start realizing there are no unicorns and triggering a collapse of the interest based bullshit derivatives market that is well over a hundred trillion.  Moreover, how would the debt be serviced?  Now things get interesting. Are we all becoming Japan?

SuperRay's picture

5% - 10%?  how about 30% - 50%, with more accumulation as the dollar failure becomes increasingly obvious?

DoChenRollingBearing's picture

SuperRay, if your question is directed to me, almost any mainstream money manager says 5% - 10% in gold is OK.

I am at 12% (all PMs combined), a month ago I was at 11%.  Most of that extra 1% has come from higher PM prices, a little from recent buying.

The cautious (paranoid?) Bearing does not like the idea of putting more than, say, 30% of his wealth into any one asset class.  Diversification is one of my favorite words...

Hacked Economy's picture

Very wise.  The smart money says that PMs are going to rise quite a bit higher, but there are two things I've learned from my younger years:

1) "I'm not so concerned about the return on my money as I am about the return of my money."  [Samuel Clemens]

2) "Never bet or invest any more money than what you can afford to lose, just in case the worst happens..."  [my father]

My PMs are currently at about 11% of my overall portfolio.  I'm working to make it 25%, which is about what a healthy government should be operating at.  But all things in moderation...and with a level head....

Pegasus Muse's picture

I adhere to Eric Sprott's investment philosophy.  He says if you find something you truly believe in and you know in your gut is the right investment, go for it.  He is more than 90% invested in PMs (bullion), miners, and other natural resource stocks.  He calls gold the investment of the last 10 years and silver the investment of the next 10.

I'm 66% in bullion, split 50:50 gold:silver, with rest in PM miners and other natural resource stocks.  It's been a bumpy ride but an interesting and profitable one. 

Hacked Economy's picture

No doubt you're going to do pretty well.  When I say my "portfolio", I include my 401(k), which I stopped contributing to some time ago (and started using that monthly contribution money to buy physical).  Unfortunately, my plan doesn't allow for any diversification into any type of PM (not even SLV i-Shares), or even a hardship withdrawal.  I'd rather take the withdrawal, eat the taxes, and use that money to get into some more physical and some choice junior mining stocks I believe will peform well and give me a MUCH higher rate of return than the 401(k) ever will.

Besides...if the economy goes down the flusher, then the 401(k) might not even be there for me anymore.  The physical PMs would be the only portion safe from being obliterated from the Keystone Kops at the Fed.

Oh well.  Ya work with watcha got and do the best you can.

Rainyday_man's picture

+1 if you ain't a $ billion endowment, 25% and up is better choice.

LawsofPhysics's picture

We should have been raising rates incrementally a long time ago.  The Fed has now painted everyone in the western world into a corner.  The easy money has to keep flowing for two reasons.  First the "mark to unicorn" accounting becomes more and more shaky as more and more people start realizing there are no unicorns and triggering a collapse of the interest based bullshit derivatives market that is well over a hundred trillion.  Moreover, how would the debt be serviced?  Now things get interesting. Are we all becoming Japan?

SuperRay's picture

we'll be japan after Indian Point springs a leak...

Big Corked Boots's picture

Deducting 1 star for making me look up the word "adumbrated."

http://en.wiktionary.org/wiki/adumbrated

Just say WTF you mean. I'm not impressed with that there fancy writin'.

Edit: ___ plus 68 = 68. Math even a congressman can do.

Diogenes's picture
"Adjective

adumbrated (comparative more adumbrated, superlative most adumbrated)

  1. (comparable) Obscured.
  2. (comparable) Foreshadowed.
  3. (heraldry) Depicted on a shield as an outline instead of as a solid figure.
[edit] Verb"

 

He either obscured something, foreshadowed somethng or depicted it on a shield as an outline.

I'm certainly glad we cleared that up.

rodocostarica's picture

I dont get it. This hedge fund is strongly geared towards gold and has negative first quarter returns? Hows that work out?

 

sudzee's picture

"followed closely by the long position in CDSs, gold (essentially the cost of carry and the decay on the long call position),"

Losses on gold position? Just buy the frikken physical. 

PulauHantu29's picture

Great article. Thanks. Gold is the safest (imo) but I have added USO for oil since I don't see oil going down much in the future for a number of reasons. Same goes for palladium which is controlled by Russia and S Africa and with every one of the 3 billion + INdians and Chinese wanting a car.

Long:

GLD

USO

PALL

 

Good luck to all ZH'ers.

Tapeworm's picture

Look at USO compared to WTIC or Brent.

Big Corked Boots's picture

And good luck to you and your PALL longs. Three billion potential car owners are going to remain potential in a bleeding global economy... just sayin'.

lasvegaspersona's picture

Being a small and nimble investor (speculator) I have enjoyed the last 6 months (very much thank you) being in AGQ a Ultra (2x) Silver fund. I have tripled my $$ and every so often I change some paper to real. I too believe that diversification is wrong when you are experiencing the trade of 5 lifetimes. I would prefer if gold was doing the heavy lifting but silver is doing it now. 

About a year ago I read a book on gold. It presented the 10 commandments of gold. #11 was "Never Trust Silver" I laughed. Afew weeks later I jumped into silver and while there have been a few  weeks of heartache I am soooo happy I'm in. I have a few trigger points where I get out but lately there has been no safe exit points. 

It kills me to buy more shares at almost 4x what I paid for the first ones I bought but hey "It is only fiat".

I would not encourage anyone to follow what I am doing but until silver quits I can't quit it. 

If anyone could prove to me that the dollar can survive I'll behave and buy a nice balanced diversified portfolio. I keep trying to find an argument that makes me believe I am wrong because what I am doing is reckless. I simply can't hear one. Until then I remain heavily in one asset watching hourly for the time to jump out. 

While diversification is safe, more money can be made in concentrated investments. 

BTW no one else's livelihood depends upon my  thought process.

mccoyspace's picture

AGQ all the way. The ProShares ETFs are like the crack cocaine of investing.