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Henry Smyth: Is this the Rothschild Moment for Gold?`
"Interest is the difference in the valuation of present goods and future goods; it is the discount in the valuation of future goods as against that of present goods."
Ludwig von Mises
“Planning for Freedom”
We’ve all been watching the selloff in the global gold market. Armies of chicken littles are in a frenzy due to suggestions that the Fed may be ending its quantitative easing, so I thought this is a good time to check in with my friend Henry Smyth of Granville Cooper Asset Management Ltd. (GCAM). Henry is a former Coutts & Co. banker and a very astute observer of the global financial markets. We spoke last week in New York. -- Chris
RCW: Henry, the gold market has been taking a beating in the past few months. What do you see as the drivers of the gold market today?
HS: Since $1525 support broke gold has been in the throes of stop loss selling. Gold is now over 2% below its 200 day moving average. Physical supply is extremely tight. The precious metals analysts where I trade in Zurich have very good contacts among the refiners. They tell me the order backlog is over four weeks now versus four days in a normal market. Same for Shanghai and Mumbai where you see sharply increasing demand as US Dollar gold prices fall and gold premiums rise. Here in the United States the US Mint cannot keep up with demand for gold and silver eagles.
RCW: So is this correction a normal reaction to the Fed? Or has the fact of QE magnified the volatility of gold (and everything else)?
HS: The shorts in the market are running out of short fuel. The decline in gold has been going on since late 2011 and is very long in the tooth. Sentiment against gold is virtually 100% right now among Western gold analysts. This is a Rothschild moment.
RCW: This is a reference to the famous dictum by Baron Rothschild: “Buy when there's blood on the street?”
HS: It is. There seems to be an expectation that the end of QE will be bullish for the Dollar and therefore bearish for gold. My view is the end of QE will be bearish for all those asset classes which require QE for life support and/or do not do well in a rising interest rate environment. That would include the bulk of US equity and fixed income markets.
RCW: So then I take it you currently are a buyer of gold?
HS: Gold is in a primary uptrend and has been since 2001. The long gold strategy of the Granville Cooper Gold Fund II Ltd. began in 2003. We went through a correction in 2004-5 and another in 2008-09. The current correction is longer in duration but similar in percentage change to the previous corrections. Our investment mandate is long term outperformance against the US Dollar gold price. We use corrections to build positions for the resumption of the primary trend. We have buy stops out there now.
RCW: So given the degree of government manipulation of the financial markets, how do you get a clear view of the gold market?
HS: Gold began its uptrend prior to the onset of the first QE. Fed policy can accelerate or retard, but not alter, the primary uptrend in gold. Gold is a global asset class but is viewed in a very provincial way in the United States. We are seeing a tectonic shift in global asset allocation as gold moves from West to East. This is far more significant than the West appreciates. In my view, this shift is it is akin to the movement of gold from Europe to the US following the 1933 devaluation of the dollar via gold by the Roosevelt administration and the promulgation of the Nuremburg Laws in Germany in 1935.
RCW: That is a pretty bold statement. The real driver of wealth migration from Europe to the US was two world wars. How do you see China leveraging their accumulation of gold to build long-term advantage for the Chinese economy?
HS: It appears that China has since the turn of the century had a state policy of encouraging gold ownership by its citizens. Given this policy and the evolution of their bilateral trading and clearing agreements and systems, it is reasonable to assume the Chinese have global ambitions for their currency, and that their gold holdings will be a significant support to the international acceptance of that currency. A reserve currency is the ultimate projection of state power. I think the Chinese get that.
RCW: Thanks Henry. Hopefully somebody in Washington will take heed of your analysis.
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that was well worth the price of admission
Well I don't know what felching is, but all that other stuff is just fine between consenting adults. Anyways "white shoe boys" implies Northeastern protestants. It's silly to associate a particular racial / ethnic / religious group with this. But you had the Warterloo reference right, I'll give you that. Oh, and...silver, bitchez.
The White Shoe Boys are not a particular racial/ethnic/religious group per se, unless you consider inbreeding and nepotism to make a distinct addition to the human genome. They ARE a group of conspiratorial, highly entitled, capricious and utterly corrupt pricks and bastards who would sell their own grandmothers into slavery to earn the favor of the Wall Street 'old money.'
White Shoe Boys are NOT to be trusted...and if you had any sense you would deal with them using an aluminum baseball bat or a tire iron...
Ok, seriously. You think that Northeastern Protestants are "conspiratorial, highly entitled, capricious and utterly corrupt pricks and bastards who would sell their own grandmothers into slavery to earn the favor of the Wall Street 'old money.'???"
You actually think these thoughts?
No, they are not all Protetants. Who now dominates Ivy league schools (excluding Asians) -especially in the faculty? They are clearly not Protestants -or Catholic for that matter.
Some sure seem to be.
Dubya went to Yale and had a place in Maine. I believe he would answer to Protestant.
United Fruit which sponsored the massacre of so many in Guatemala and elsewhere ... for bananas, run by one of the previous nasty Bushes was HQ'd in Boston.
Jeffrey Amherst - ever here of him? Original WMD attack in N. America. They named Amherst and Amherst College after him.
That's all I can come up with on short notice.
Full disclosure - I did not arrow you in either direction.
Look to old New England fortunes made during the time of tall ships, the fur trade and early industrialization there is where you will find the old money. Think of the Astors, Cabots and Lodges. The new money made during the latter half of the 19th century i.e. Du Pont, Vanderbilt, Rockefeller and Morgan is now just as entrenched.
Look, trying to blame the collapse of the Republic on any ethnic group is just not right. That's at least how I look at it.
I agree but I think this is literally the first time I've seen someone even HINT at using an outdated formerly WASP specific, but since greed-specific term to minorly call out that group of folks and I've been reading ZH since 2009 so...really kinda overdue. I've seen lizard aliens, jews, muslims, satanists, racists, Kenyans, the Chinese, Russians, English, Swiss and dang near every group of people on earth blamed for the collapse of not just the Republic, but Western Civilization.
Honestly it was kind of refreshing to read a new group blamed because many of them have been said 10,000's of times on ZH. That said, i certainly do not blame any religious, ethnic, political or other group for the collapse of the Republic or anything else. It's greed and ultimately it's deeply rooted fear and a total denial of one's own humanity, let alone anyone else's, that leads to the sort of behavior people are talking about. Really this is a time for introspection, getting things in order and an expansion of one's self-care and self-love that inner strength you nurture will pay dividends untold now and long into the future as it spreads out to family, friends and community. It's called by many names, character, respect, decency and humanity. It's what holds society together and it's what is needed now more than ever along with wisdom.
I agree. We can see the team needs a variety of players. Sometimes they farm them from birth. It takes a village.
At the same time, calling out the special talents of some team members can not be off-limits. Can it?
No, no. He is saying that they are mammon lusting soul-less human parasites with a depth of character less than plastic wrap who may just happen to be Protestant, Catholic, Mormon, Jewish, or what have you - who willfully ignore every uttered word and concept of Jesus, the God of Abraham, and human decency - to make a buck.
Like GHWB ? (George the 1st)
And every other politico silver spoon just like him in both parties.
You mean like this?: http://www.youtube.com/watch?v=yAMRXqQXemU
(Smith Barney commercial - John Houseman - 1979, link opens in new window, 0:30)
It used to denote WASPS, but has taken on a broader and more innocuous definition.
I'm with you on the Silver, and he gave you such a florid smack-down I'm giving you a +1 in sympathy.
p.s. - felching: http://en.wikipedia.org/wiki/Felching
I actually remember those ads. Anyways, advertising to people by using shills that are of similar background is called "affinity fraud," and it's how the original Mr. Ponzi was so successful...at first.
Affinity Fraud... I like that. Like Ralph Lauren...
Where did you hear that phrase?
Um, wikipedia?
http://en.wikipedia.org/wiki/Affinity_fraud
Thanks. Beautiful.
Like John Kerry pretending to be Irish-American?
Is that considered affinity fraud?
It's certainly fraudulent.
Yo dat's racist!!!
I wonder if it would annoy the Black Panthers if they knew I didn't care if they referred to me as a cracker? In fact....it kinda amuses me.
The word cracker might mean something special to them....but it doesn't mean a damn thing to me.
I love the way terms like this get carried on for generations. The original to the best of my knowledge cracked whips and drove mostly pigs and some cattle.
Blacks use it to refer to slave overseers. The idea is that every black slave was whipped all day every day just for kicks. And they put up with this...?
I love cracker. Although i thought it meant "white trash crack head".
best way to shrug an insult is to keep it and make it your own. Wog use to be an insult in Australia to italians/croatians etc. now its acceptaed tongue and only offencive if you really try to make it so.
if you call a wog a wog, they take it as a compliment.
if blacks responded to the n word with "does yours touch the ground?" or "been in the sun today?", it would soon stop being an insult.
"i am proud to be an "n", but dont call me it". idiots
Seems appropriate: http://en.wikipedia.org/wiki/White_shoe_firm
It was the Gilt market, i.e. sovereign debt...
TARP was a cover for the crooks to get out...this is an operation for them acquire the last of the real money.....the cool part about it is they're using your taspayer dollars to do it.
"Rothschild moment" is an unintended double-entendre.
It also refers to Gordon Brown's bailout of the massive NM Rothschild short position, which began on 5/7/99.
Mr. Smyth has just called the second "Brown's Bottom."
It seems critical mass was reached once gold dropped below $1200...
That must have been everyone's BUY point.
Is that like the Brown Note?
+1 12TA...the fat lady sings and the elites have a "brown-out."
This one will be worse than the Super Bowl Flush! Phyzz, bitches!
Good reference!
In case anyone missed the memo you sell the rehypothecated paper crap and buy the physical. Banker BS 101.
I still prefer "The Brown Bottom" over Brown's Bottom". It has more graphic connotations.