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Granite Fund Spends 15 Pages To Explain Why Gold Is Not A Buy... Or A Sell
Zero Hedge has posted numerous research articles, white papers, hedge fund insights and generally articles, on why gold is likely underpriced (anywhere from 10% to 5000%) in the current environment when the only thing global bankers have recourse to producing in excess quantities is paper with various dead presidents painted on it (and are taking full advantage of that fact). It is only fair to present the flip side. Attached is a presentation by Granite Fund advisors in which the fund's PMs (an ex-Sandeller and ex-Karscher) spend 15 pages to convince their LPs that gold is neither a buy... nor a sell here. Of course, the bearish tone dominates, however if the presented counterarguments for gold ramping are the best the two authors can come up with, and if indeed these are the strongest arguments the gold bear camp can make, then there is truly little holding gold back from record (inflation-adjusted) highs (aside from the JPM/LBMA daily paper manipulation, of course). We may or may not get to refuting the arguments contained herein, although any paper that dismisses a hypothetical $4.5 trillion additional infusion of new money into the market as not likely having an impact fiat currency devaluation, likely stands on its own "merit."
And just to show how confused the Granite gentlemen may be, below is their presentation that states that Europe is far worse than the US. Alas, when accounting for US debt, Messrs. Lo and Minesuk somehow completely ignore (or avoid) the $100 trillion or so of entitlement NPVs that everyone else with a US-bullish persuasion tends to gloss over. Um, yeah - that's money is all too real, and all too missing. Again - we may get to debating this "analysis", although it is quite unlikely.
Link: A Special Note on Gold, the Sovereign Debt problem, and related Investment Strategy
Link: Sovereign Debt : The Difference between Europe and the US
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I see a see-saw.
Inflation on one side, deflation on the other and gold the moving fulcrum.
Interesting way to see it, it instinctively tells me which way this whole dynamic is likely to swing.
ORI
http://aadivaahan.wordpress.com
things are indeed getting desperate if this is the best that they can muster. just how big of a body blow will JPM (read the taxpayers) take when silver and gold explode?
A much bigger blow than they took for their wrongway bet on coal.
things are indeed getting desperate if this is the best that they can muster. just how big of a body blow will JPM (read the taxpayers) take when silver and gold explode?
Unfortunately, I have a hard time imagining the bull case for the economy. Even they admit a selective EU default is likely. Even the bullish admit the EU stress tests were a farce. So a selective EU default doesn't collapse the banking system in Europe? And no cross-Atlantic contagion? And how can austerity solve the debt problem - see Ireland. As GDP declines, you never really get in front of your debt. Greek debt is projected at 150% of GDP after the rescue.
And then how will the US government 'drain down private balance sheets' without impacting growth?
And, pray tell me how the muni's are going to get out of their jam? IL, CA, AZ - these states, locals are flat out broke.
I wish I had taken the other color pill.
Nothing of value.
Indeed Pladizow.
Granite says ZERO about gold being an historical preserver of wealth. I would conjecture that most of us gold buyers hold it mainly for:
1) wealth preservation
2) privacy
3) mistrust of .gov and the financial system
Granite is neutral on gold as an "investment" or speculation. How brave.
I agree with your three reasons, but would add that gold is a lot like insurance. You buy insurance before your house catches on fire. You hope your house never catches on fire, but if it does, you have insurance. You can not buy insurance once your house catches on fire. I don't think any more about monthly gold buys than I do paying my State Farm premium each month.
I have paid State Farm each month of my adult life for auto and home insurance. I have never made a claim, but rest better at night knowing that I am insured. Same with gold. If we are all wrong, and the economy recovers, great . . . we continue to get our paycheck, and look forward to Social Security, and our 401K's being worth something, and can look forward to an enjoyable retirement. If we are right, and things do fall apart, we have our gold.
Wasn't it State Farm that screwed over a bunch of folks after Katrina?
don't listen to this bs.....the show is about to begin...its immenient....i just filled my gas tanks up.....gold revaluation will happen overnight possibly this weekend or the following weekend. Don't sell ur frickin gold.....hang on for dear life its coming and coming fast now......
Could be. Looks like gold has decoupled from USD.
re-up or de-down valuation?
everyone should read stewart thomsons piece on 321gold website today about gold and nat gas
Stewart Thompson is a royal dumbass. He calls his technique the Pyramid technique of progressively buying in larger amounts and then progressively selling in larger amounts. He actually mentions that you should buy just 1 share if you can.He totally ignores that most retail investors cannot ignore commissions. Buying 1 share of GDXJ (yeah he said that..go back and look) even with IB commissions is blasphemy. Forget that most retail investors pay about $20 commissions round trip. That kind of buying and selling only works if you are trading in millions and have very very low commissions.
WHEN they dump another QE pile, your going to see the USD go completely into the toilet.............
The other Soverigns, holding large stakes in Treasuries, and Bonds, are going to dump em' like a case of VD.
Can you say, USD 45-55
you're right on that one. only question is, does this happen peacefully?
you're right on that one. only question is, does this happen peacefully?
DosZap,
Europe and Japan may do their own QEs in response to a US one, so I would be careful about shorting the USD vs. other currencies.
I completely agree with you about gold and bonds going down (although that might take awhile, I am a long suffering holder of TBT...).
...
ZH-ers, please put up with constant my reposting of our idea to pull $500 (500 Euros, etc.) out of the ATMs on Thursday August 12.
Let's show "them" that we can ACT!
For now, I do not see Japan trying to QE.
We are slowly headed for the austerity road with its dysfunctional government.
After all, its a government that takes a very long time to do any thing.
Even if we were to QE, 95% of Japanese debt is held by its own people and its banks.
It's not going to be easy and even the Japanese sheeple will notice.
There should be enough alarming signals for anyone reading Zerohedge to notice if QE by Japan becomes imminent.
I just don't see that yet.
The JPY still would be my (fiat) currency of choice if I was to short USD.
they send the alan greenspans out as a side show as to what is really going on but obviously don't give you what is going to happen. the system is broken and will be fixed thru gold at what cost to the everyday man at this point.....now that my 401K is confetti
my point about thomsons piece is is that i think he is correct in that its a one time revaluation, maybe they will let the us dollar index freefall but i doubt too far....i think the gold standard is implemented overnight. SOON!
The report is "STRICTLY CONFIDENTIAL"... What is it doing circulating the internet?
Why is it a armageddon scenario when lets say gold rises to maybe the M1 money supply but all seems ok when the people who create synthetic money via derivatives and other such magic tricks can cream off a surplus for no capital input ?
Who or what is killing the world economy - is it Gold which is pleading to a distressed global economy that it needs a measure of capital within a debt based system where the only metric is a binary pair of wages and profit or is it the bankers who are now rapidly siphoning off capital for their own personal use while capital fights labour and labour fights capital for a smaller and smaller surplus seemingly unaware of the banker extracting his measure of blood from this anemic pair of dunces.
Any banker who isn,t buying Gold can,t be a banker ........ double dealing bitchez .... yeah......
no Granite, bitchez?
I do not know who works for Granite. Surely they have their motives for their somewhat anti-gold bias.
It sure seems to me that more people buy physical gold for security and not for speculative purposes (Bravo is our most prominent speculator on the gold threads, but he speculates on other things when he is not acting as a Senior VP there at JPM).
I am trying to think of anyone I know who speculates on gold, other than those taking their chances with the ETFs. Nope, nobody I know. But, I do not live in NYC or Greenwich...
Nobody's talking me out of gold. I've been around too long, and seen too many firms act like mouthpieces for the criminal Fed to get shaken out.
What's the worst case, I preserve my purchasing power? I can live with that.
So watched the SPX go into the close on 1min ticks in realtime was hilarious in the last 30 seconds. The AUDJPY was heading south and the SPX went flying north in the last few seconds. Obvious pumping going on there.
GOLD WILL BE REVAULED..BUT NOT SO SOON...THE BANKSTERS CANT DO IT JUST YET..AS THEY ARE HOLDING TOO MANY DOLLAR DENOMITED ASSETS...IT WILL COME..BUT ONLY WHEN THEY FEEL THREATENED BY THE HANGMAN'S NOOSE..
And when they liquidate it will be 'projectile denomiting'.
1. They seem to think the markets are not forward-looking--that only an immediate inflationary impact is a concern.
2. They seem to think the pound and euro are the biggest risks, and ignore imo the more likely scenario of competitive western world devaluations.
3. Do they really think us US citizens, who would not want our $ assets devalued, matter to the Fed--the big banks' club?
Havenstein
Easily Explained: Like many writers he got paid per word.
You can,t buy Gold in quantity because its not there to buy as people are afraid to sell,you can sell but then you won,t be able to buy because people are afraid to sell (unless you want some nice paper crap) ......... catch 22
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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