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Gold Plunges; Paulson Liquidation Speculation Abounds Again As Fund Rumored To Be Down $1 Billion For The Day
There are some crocodile tears over at the 50th floor of 1251 Avenue of the Americas this morning. With a holding of 168 million shares of BAC and 506 million in Citi, Paulson and Co. is down nearly $300 million on just its top two positions alone. When one adds the other top ten positions, which include $3.5 billion worth of GLD, as well as massive positions in ANG, CMCSA, STI, TRE, RIO, BSC, COF, WFC, MGM and many others, it is not surprising that the market is rife with rumors that the once vaunted bearish and now very much bullish (who according to Goldman's carefully crafted settlement press release yesterday, only achieved his subprime-related wealth due to prospectus misrepresentations by Goldman, which is now permanently in the public record) is down about $1 billion for the day so far. Of course, on a NAV of $31 billion this is not all that big, but likely will not help with the recent surge in redemption requests.... Or the need for liquidations. Gold is plunging, and according to market rumors the primary culprit is once again JP, whose GLD holdings that are merely a type of share class (which needs to be indexed lower as the AUM drops) are getting liquidated, pushing spot far lower.
As a reminder here are Paulsons & Co.'s recent holdings:
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Deflation will shell certain asset classes into nothing, yes. It will happen fast, so the phrase "hyper" can be used. This but the deflation/inflation debate is trite considering all assets are priced in not just an overweight medium of exchange, but one that has zero intrinsic value.
China is screwed.
What is your point?
I think the whole deflation argument is hilarious.
The ONLY way out of our massive pile of public and private debt is INflation...you pay off yesterday's debts with the less valuable currency of tomorrow. THE ONLY WAY OUT!!!
So, the deflationist argument is that governments willingly improve the value of their currencies so that their debts become even more massive? Gimme a break.
The deflation argument is total, bandwagon-jumping nonsense.
Shitshow.
When you put that way... totally agree.
It's like people can't get out of the money trap, thinking that bursting of bubbles means falling prices which translates into a stronger dollar, which almost makes sense. The catch is that the dollar's structure is what lead to the bubbles, and the dollar is looking like just another bubble that we're watching explode. What's left is not the dollar, it's the undervalued real assets, commodities, etc, that now need to repave the giant craters left behind. So we'll see a decline in markets that were inflated by borrowing dollars while suppressed rates, such as silver and maybe gold, will return to their normal levels, leaving the dollar to its own demise.
@ Turd Ferguson
the deflationist argument is that governments willingly improve the value of their currencies so that their debts become even more massive
No. That is not what the deflationists believe. The government doesn't willingly bid up the value of their currency, the markets do - for proof of that, just look at the SNB's efforts recently to suppress the franc. No doubt about it, governments would love to suppress their currencies, but those pesky markets have other plans in times of great uncertainty. There is so much erroneous information being thrown around by members of this forum, it is no wonder that all of you are so fucking confused and want the world to end.
In a deflationary collapse, people will exchange assets (stocks, watches, gold, houses, art, etc.) for cash. The value of cash will increase because it will be so difficult to get - governments loose control of the currency, as it is hoarded. When people loose jobs, retirements, pensions, savings accounts, etc., cash becomes king - like the minor collapse we had in 08/09. The USD rose, despite the fact that the underlying assets backing the USD were unraveling.
Those of you that are wishing and dreaming of an apocalypse don't realize that the USD will zoom into the stratosphere before it falls into the ditch. And you can count on gold moving inversely. And another thing - if/when the USD turns into confetti, the world ends. Either you'll have a gun pointed at your head, or your neighbor will.
Hah, it's not really markets at this point propping up the dollar. A lot of markets are propped up by the dollar. More importantly, the biggest players in these propped up markets want to either save or destroy them. The rescue team either wants to get paid back on all that debt or they just want to keep the cycle going long. The demolition team have merely taken the short side, for some evil and some good reasons. The government is the monster of the overlap with members who wish to keep it going yet don't want to tighten their belts, playing both sides, which don't work, yo. So, I guess I'm saying that Turd is at least half right and you're at least half wrong.
So as cash becomes more and more valuable, I should immediate cease all debt payments and hoard cash...because
Well...
I can't think of a reason.
...so you can one day build a giant green paper city, call it Oz (to be confused with ounces), and live happily ever after, hoping no one lights a match.
I can't think of a reason either, obviously.
If you actually traded something for something and feel you weren't misled, then don't default. If a fractional reserve bank gets out of the trade by "creating" something out of nothing and pretends to trade with you so that you'll give them something for practically nothing all the while the value is taken from those already holding something, then a default can help make things right again, almost like it never happened, destroying what was falsely created. The one step further, of turning this easy money against itself, is get as much easy money as you can borrow, trade for bullion, then default, but is not for the passive person who doesn't want to fight back or do anything that might offend the gods.
" if/when the USD turns into confetti, the world ends"
Oh jeez, stop being so melodramatic. Sheesh, Zimbabwe's still around isn't it? Argentina's still around isn't it? Germany is still around isn't it?
Some Amerikans think the rest of the world waits with baited breath to dissect the minutae of their every utterance, no matter how completely unoriginal and witless.
Enjoy your soon to be former reserve currency while it lasts, 'cuz it won't cous'.
Shoot, now I have to explain the joke. But it's never funny that way.
Look, I was totally being sarcastic. Mostly, I agree with you. I see the whole inflation vs deflation debate as a false dichotomy that slips into absurdities. Here, how about I say this instead:
Anything that could cause deflation could also cause inflation, depending on the wording. Contracting credit due to defaults/bad credit trashes dollar PR causing both deflation and inflation... The supply of dollars shrinks (less debt) but it also stinks (less demand for said debt).
It's like an endless debate about The Chicken or The Egg, which came first? It's not even a good question, as you seem to be aware.
Have you seen any of these:
http://larouchepac.com/node/11319
http://larouchepac.com/node/11296
http://larouchepac.com/node/12066
Does it in any way make it more obvious how deflation and Hyper-inflation
can share the same root cause(s)?
Very interesting. I remember visiting their website last year and being fascinated but dismissive. Today, I'm not agreeing with everything in the vids but am still learning lots from what they're saying. Very thought provoking. Great history lessons, too. Thanks.
After evaluating all the arguments (and thanks Jesse for commenting), I am planning to change lunch plans and buy Au coins. If the East is now gold rather than red, perhaps some Pandas . . .
Don't know where gold's heading, or the dollar. The markets are too erratic. I do know that regular people in a normally functioning country want stability. And since there isn't the slightest evidence that we're going to be getting any, I suggest we're in for a terrible time ahead, no matter what ends up happening with gold.
fwiw, i own gold, because I don't know what else to leave my kids at this point that has a chance of retaining long-term value.
Well said. Fake things always deflate against real things. That's the only deflation that matters.
I only started buying recently at 685 - 780 Euros a ounce - I ain't selling until I get a inkling of a major geopolitical shift in this little planet.
I don't see it - the same goons are in charge of the madhouse and they will not go down without a fight.
So this farce may take some time......
At 2pm EST, gold "plunges" 1.57%. S&P "down" 2.49%.
Yawn.
Gold "plunges"?
18 bucks?
yawn......wake me up on some exciting news please. This is normal for gold.
PMs ramping heading into the close. What say you haters?
"Let the haterz hate, and watch the $$ pile up."
50 Cent - In Da Club:http://www.youtube.com/watch?v=5qm8PH4xAss
"If the roof on fire man, just let it burn/If you talkin' 'bout $$ homie I ain't concerned"
"I'm a tell you what Banks told me, cuz, go 'head switch the style up/And if they hate, then let 'em hate, then watch the $$ pile up"
I think he will unload the banks long before he unloads any gold.
is it me or does Paulson only liquidate when the Crimex is open
People who have the real thing (PHysical gold) are not selling, it's only paper that is selling and as the price comes down (if it does) it will be more opportunity for us to get even more gold for our fast depreciating confetti
Thanks Jamie and Paulson too if it is in fact you
As was nicely point out above, it's not Paulson because silver tanks at the same moment. Just the usual short selling skanks.
I agree this is nothing but the boyz slamming gold via the Crimex. Every morning is the same thing
Gold has a 5,000 year track record of being able to buy at least something, try that with fiat currencies over the last 5,000 years. What do you have in your wallet?
Some Chaps getting a bit upset on here,must have a shortage of Gold at home,sad,sad,situation.....
The D-word should be default.
thesapien,
#4 supplements #3
there is plenty of gold left to mine, its just getting harder to find and mine as the low hanging fruit is mostly gone. new exploration grows more expensive and the mines are getting increasingly more difficult to mine from what I understand.
The fact that central banks can report more availble gold in the vaults than the swaps and leases portend doesn't make up for the fact that silver is still far more rare than gold. In the distant future, gold will be extremly important to efforts to explore outerspace as it has extremely excellent longevity against the entropy of space based radiation and its a great conductor but in the mean time silver takes the crown for the most important technological and industrial metal in terms of number and importance of applications for at least the next 50 years in my opinion.
Above ground available silver is much less than it was 50 years and I mean MUCH LESS. It wouldn't take a genius to figure out how to utilize not all that much cash (less than $25 Billion) to use the levers of physical silver and gold and the relations to insure long term wealth preservation for themselves in my opinion.
Excellent response, thanks.
Tangent: I do think that the only reason silver is used more is because of its current cheap rate. If gold had been trading at the same rate, we would be using it in all sorts of old and novel ways, and it, too, would be nearly all used up. Instead, we either use poorer substitutes or don't even try to think of new inventions requiring gold. It's got to be one of the coolest substances for a modern day engineer to build with, yet too expensive for most to even consider using. But, at least, we're saving it for future tech by not using it and recycling what we do!
I also love the physicists who say that gold cannot be created by any means within our solar system, probably not even our sun because it's too small. So we may never be able to conjure the amount of energy required to make more gold ourselves.
Recycling gold makes me think that maybe what we tend to view as money is simply that which is most recycled. Hey, someone tell me if this is a good working definition of money?
“Sssss,” …. “Praps ye sits here and chats with it a bitsy, my preciousss. It like riddles, praps it does, does it?”
That would imply that some of my ex's have some sort of inherent value? Nah.
Well, wait... if they do get passed around a lot.... some people might consider them "easy money."
Crap. Might be a good working definition, but maybe the kind that gets mostly recycled should be used for short-term needs, not something to hold on to...?
all thse trolls are hilarious. Gold drops a few dollars from its all time high and they say they told you so. Nadler has been telling us that gold would go back to 600, and it never did so all these Nadleretards like JW and JonnyBravo and all the other Nadleretards will change their names when gold is 1600 and come back with new names saying gold is going back to 1200
Ever noticed this always happens on Fridays?
Opt Expiry is the 24th.
Ever noticed this always happens on Fridays?
Opt Expiry is the 24th.
Johnny Bravo this is to you.
I remember when I was a young badass who didn't need anyone either, I was always right! Fortunately I and probably most of the people on here had the benefit of a decent future ahead to take our lumps get kicked around some and learn a little humility. You probably won't have that luxury given the current state of this nation and world. Careful of your attitude JB, you may be right on this from a trading perspective but look 5-10 years down the road, no one can be sure how gold will relate to the dollar, there are a thousand different factors that could change everything. Time to grow up a little, offer your advice, respect others opinions and quit being such a little ass and other people might come to respect you. Being arrogant instead of confident is like a big bright neon sign over your head saying someone come kick my ass.
When TSHTF, stock/bond traders aren't gonna be skilled in anything useful to the common folk, better learn another useful skill guys!
FD: I know woodworking, electronics engineering and computer programming.
Gold is doing fine. Outperformed the market today. Silver was actually down more. If the big boys start to blow up they'll have to sell of course.
Why would Paulson have such super massive positions in financial companies in the middle of a depression?
They're the hedge.
Ok - I was keeping my cool for a while - but its hard to ignore the fact that this ZH blog is filled with nothing but a bunch of fucking retarded anti-gold fuckwads who pop a boner when the yellow shiny drops 15 bucks...
So by all means, keep bragging about the paper-printing genius of men like Ben Shalom Bernanke and Tim Tiny-dick Geithner while you count your huge profits from the 15 dollar gold drop... Where the fuck do you guys all go when gold hits new high after new high?
JB - you said "I've been bearish on gold since it was 1265" - Yeah - and you were bearish at 1165, 1065, 965, and 865... so until you actually get a firm trend that validates your incessantly bearish calls, stick a finger in your twat, put on your dunce cap and sit in the corner and shut the fuck up.
Congratulations on your 15 dollar victory today gold bears - it obviously means very much to you and I dont want to take that away from you...
Yours Truly,
Nathan Wind
I can't speak for most of the fucking retards, but Tyler seems to be a fan of gold, and little else. Me too. Actually, I like other commodities too. But you have to time it correctly as we're having periodic market collapses followed by furious rebounds.
are these anti-gold clowns the same as Newbegold and AMericanpatriot in Marketwatch. Same BS different names
_
“Is it nice, my preciousss? Is it juicy? Is it scumptiously crunchable?”
_
Two topics on ZeroHedge are always good for a few hundred comments, and a few thousand junks, per article: gold and the Middle East.
In all of the bandwidth spent arguing the two issues, has a single mind been changed? Futile is a word that pops into my head.
On the plus side, more comments means more pages means more ads to generate cashflow for the site.
Mr. Paulsen is in a "Fighting Windmills" phychological drift. He has pressure to perform well and that is somehow translating to an underlying bullish bent on the economy. He has way too much AUM.
It seems like just yesterday that you and GS conspired to sell toxic crap to investors. And with GS's $550 million slap on the wrist, do you really think the world is sane now ?
No Mr. Paulsen, things are still way fucked up, thank you.
OK, we have had spirited debate from both sides of the aisle - deflation/inflation. I can see that each side is passionate about whether or not one should be holding GLD or even physical PM's in the coming months.
I want to learn something. I already hold limited PM's (physical US Eagles Gold/Silver <$10K). I want to be hedged against deflation too. I don't know exactly which way the economy will fall, but I do think a fall is possible.
So, if PM's are useless to hold during a deflationary period, what do you recommend that I do? Should I also keep just under $10k in FRN's tucked safely away at my place, or what?
This is an honest question folks - I am not trying to incite another round of name calling or bragging on what you made "today" in the markets. I want to be able to provide for my family when things fall apart.
By the way - my take is a little of both camps. We very well could have asset deflation and commodity (food, fuel) inflation. I don't think looking at our past has the correct picture for our future. I think that an accurate snapshot of where we will end up lies just across the Pacific. Yup, we are the next Japan. We are in the same boat. Real estate bubble pops, the central banks do their best to interfere with the normal correction, and the pain is drug out for decades. Each new CB head thinks that they have the magic bullet and comes in the door sprayin' lead. Everyone should duck until they run out of bullets, and then they bring in the next gunslinger. The ones with the means to control monetary volume and "value" (in an FX context) will never give up. They are so sure that they have to power to fix the problem, but they can't - and they won't admit that the system is bigger than they are....ever.
Unfortunately, there isn't even a way to know for sure whether so-called deflation is happening. That's because so many elements in the computation are absolute, total fictions that do not belong in any honest computation. All world currencies (since the 1970s) are now fictions, for the first time in history. All bonds are fictions, since they're denominated in pure fictions. Stocks and pretty much all other financial instruments contain a huge component of fiction, since they are massively manipulated by the predators-that-be who have unfettered, utterly non-transparent access to unlimited creation of [paper-and-computer-bit] currencies and unlimited ability to direct their fictions at the long or short side of any financial asset... and indirectly at the long or short side of any real asset.
It is safe to say that many fictional (and a few real) assets in the USSA and western non-economies are still caught in pseudo-deflation... while many others are not. So what? Of all commodities, gold is least coupled to so-called deflation, because it is the entire fictional fiat debt-currency system that has gone haywire out of control, and gold is the most obvious solution (having worked for thousands of years). Of course, given the overwhelming habit the populations of earth now have for believing and acting upon blatant fictions like "fiat currencies" and "governments", the predators-that-be can cause short term dislocations even in the most immune asset, namely gold. These are blatant buying opportunities for anyone who isn't trading in minutes, hours or a few days. To attempt to play the short side of reality, and side with blatant, obscene fictions, is very dangerous, and quite disingenuous and amoral. Why bother?
<b> numbskulls </b>
Until the gold miners start confirming the gold uptrend, then you have to entertain some doubts. But there's no saying that the gold chart doesn't have a bullish posture.
http://watch.bnn.ca/#clip325549
But the gold sell-off is old news by now:
http://www.321gold.com/editorials/hoye/hoye062510.html
The fact that we are awaiting COMEX options expiry on Tuesday makes a difference. Maybe trashing Paulson & Co. is the same playbook as trashing Lehman, and at the same time, you have a way of bailing out the bullion banks.
There is a subtle irony that people will throw money at Paulson & Co. when they know that they can arbitrage in the markets, but will withdraw when there's no evidence that they can continue doing so for their clients.
And, to some degree when discomfitted clients buying out the entire treasury curve with no place else to go, and the discount rate starts declining again, bullion is well positioned to reap the benefits.
I am a fan of reality, and strongly opposed to treating blatant fictions as if they are reality. So I'm quite happy to be able to buy more physical gold now, and I'm not the least bit concerned that prices will fall further. In fact, I hope they do fall further, so I can buy more at better prices.
Anyone who worries about the price of gold really should remember what is real and what is fiction. FederalReserveNotes and all other world currencies are pure, unadulterated fiction. And physical gold is pure, unadulterated beautiful reality. When you get nervous, remember that. As the world of fiat currencies crashes and burns, as they have a 100% track record for doing throughout history, gold will hold its value in reality --- and rise dramatically when measured against these destructive fictions. Go gold. Either direction is good for me, and everyone who understands reality versus fiction, because medium and long term the direction is up, up and away!
I pasted a graph of the value of gold investment next to the value of money market funds... to make a point about how vastly higher gold would fly if even a teenie, tiny little percentage of that freely available liquid cash moved into gold ($78B versus $2849B). But apparently we can't post images, huh?