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David Einhorn's Q1 Investor Letter: "Under The Circumstances, It Is Curious That Gold Isn’t Doing Better."

Tyler Durden's picture


Sadly, not much in terms of macro observations this quarter or discussions of jelly donuts, but a whole lot on the fund's biggest Q1 underperformer, Apple and the hedge fund's ongoing fight for shareholder friendly capital reallocation as well as proving Modigliani-Miller wrong. And then this cryptic ellipsis: "Under the circumstances, it is curious that gold isn’t doing better." Say no more, David. We get it.

In other positional news, Greenlight closed out longs in XRX and ESV and shorts in AVB and MBI. Greenlight also initiated a long position in Germany EVK (ahead of public listing). It appears Greenlight is still long Green Mountain.

From Greenlight Capital, as of May 8

Dear Partner:

The Greenlight Capital funds (the “Partnerships”) returned 5.8%1, net of fees and expenses, in the first quarter of 2013.

It was a quarter of reversal: Marvell Technology Group (MRVL), our biggest loser in 2012, was our biggest winner this quarter. Yen puts, our biggest losing position in both 2010 and 2011, were our next biggest winner. On the other hand, Apple (AAPL), a top three winner in 2011 and 2012, was our biggest loser.

Overall, it was a decent start to the year with a good risk-adjusted return. It’s unlikely for us to keep up with the sort of one-way market that we saw in the first quarter, where the S&P 500 never suffered more than a trivial weekly decline. Our long portfolio roughly matched the S&P 500, we had a modest loss in our short portfolio, and macro was positive. We are four years into an economic recovery. Corporate earnings, which grew steadily during the initial stages of the recovery, are now growing anemically. The market advance can be better explained by investors convincing themselves that extraordinarily accommodative monetary policy is bullish for stocks. Unconventional monetary policy is now a global phenomenon.

The Japanese government replaced its conservative central banker with a more aggressive one. This regime change has led Japan into the global battle to see who can debase their currency the fastest and this drove our gains in Yen puts, as the Yen weakened from ¥86.74 to ¥94.19 against the dollar.

Now every major central bank is fully engaged in aggressive, unconventional policy. It seems that as each bank implements a new experiment without immediate consequence, the new policy is deemed safe, if not effective. Other central bankers notice and, acting in the philosophy of ‘Anything you can do, I can do better,’ take turns in one-upmanship. This serially correlated behavior smacks of bubble mentality. But investors are currently complacent about the unintended consequences of central bank money printing, and like most investment cycles and fads, this will persist until it doesn’t. Under the circumstances, it is curious that gold isn’t doing better.

AAPL shares fell from $532 to $443 during the quarter. The biggest problems with our AAPL investment are disappointing earnings and a diminished forecast. When AAPL announced its year-end result, it made clear that it would earn less in the March quarter than it did a year ago. Forward estimates have been falling for a while. Last July, consensus estimates for fiscal 2014 were $64 per share; estimates now stand at $44. When we thought the company would earn $64 per share, the shares seemed cheap even as they reached $700 in September. Of course, that required AAPL to meet that forecast.

Our thesis is that AAPL has a terrific operating platform, engendering a loyal, sticky and growing customer base that will make repeated purchases of an expanding AAPL product offering. Unfortunately, there have been a series of disappointments including slower sales growth, lower margins, and increased competition. There have also been delays in new carrier wins, next generation product introductions, and new product category launches. While all of these have had an understandably negative impact on AAPL’s share price, we take a longer view and believe our thesis is intact.

As shareholders, we watched AAPL accumulate a cash stockpile greater than the market capitalization of all but 17 companies in the S&P 500, and recognized that its high cost of capital and shareholder-unfriendly capital allocation were depressing the stock price. AAPL’s management and Board, either unconcerned or unaware of the detrimental effects of AAPL’s all common equity capital structure, seemed uninterested in finding a solution.

As shareholders who believe in AAPL’s core business, we wanted to help AAPL resolve its cash problem in a way that satisfied AAPL, the market, and its shareholders. Based on years of observation and many discussions, we believed that AAPL would not issue debt under any circumstances, and especially not to return cash to shareholders. With this in mind, coupled with our awareness that AAPL was loath to repatriate (and thereby pay taxes on) its overseas cash, last year we suggested iPrefs to Peter Oppenheimer, AAPL's CFO. We had no better luck than any of the many other investors and analysts who for years have pressed Apple to return excess capital to shareholders. Our concerns fell on deaf ears.

In February, CalPERS came out in loud support of a proposal aimed at improving AAPL’s corporate governance that inexplicably bundled several measures into a single voting measure. The proposal, which included an unwarranted provision prohibiting AAPL from issuing preferred stock, was in direct violation of SEC rules, and we filed a lawsuit insisting that AAPL allow the shareholders to vote on each measure separately. We believed this would generate a public dialogue around AAPL’s capital allocation strategy.

When Tim Cook later called the lawsuit a sideshow, it was understandable. Whereas we chose to focus on the very real issue of Apple’s capital structure, others seemed more intent on turning things into a circus. A lawyer known mostly for preserving the autonomy of Boards to act in any manner they wish wrote a piece titled Bite the Apple; Poison the Apple; Paralyze the Company; Wreck the Economy. Given the hysteria implied in the title, one would think we had suggested that AAPL hire Steve Ballmer to run new product development. A retired Fortune 500 CEO said “I’d give Einhorn the back of my hand,” prompting us to wonder why he wouldn’t give us the front of his hand. Perhaps most startling was the reaction from CalPERS, who vigorously defended the proposal.

The essence of corporate governance is form over substance. The belief is that properly-made decisions will lead to better decisions, so it was odd to watch self-identified corporate governance advocates support a proxy proposal that violated SEC rules. Incongruously, CalPERS believes good corporate governance is unnecessary when approving policies that purport to improve corporate governance.

Others ignored the circus and focused on the balance sheet. We received feedback from many AAPL shareholders, including some of AAPL’s largest institutional investors, thanking us for initiating the public discussion. Even some who disagreed with our idea helped further the public debate. Respected NYU finance professor Aswath Damodaran wrote a critical piece that pushed us to refine our presentation of the iPrefs idea. These thoughtful responses reinforce the value of speaking publicly, despite the more obvious drawbacks.

In the end, the judge sided with us, and AAPL withdrew the proposal from consideration. Once the shareholder meeting passed, there was nothing left for a court to do, so the case became moot and was dropped. Not long after, we met with AAPL management and its investment bankers to further discuss AAPL’s options. We believe that our thoughts were given a fair hearing.

Ultimately, the Board and AAPL decided to abandon their “no debt” philosophy and gave birth to iBonds. As rejections go, AAPL’s bond issuance ($17 billion in bonds were issued at about a 2% average interest cost) was as good as anything shareholders could have hoped for and the market seems to agree. AAPL announced that it will return $100 billion to shareholders by the end of 2015 and will evaluate returning additional capital annually. This vastly more shareholder-friendly capital allocation policy is a dramatic shift from where AAPL stood just a few months ago. We have added to our AAPL position. We now await the release of Apple’s next blockbuster product.

The other significant loser in the quarter was Green Mountain Coffee Roasters (GMCR). We would love to be the “Credentialed Bear” that gets invited to ask tough questions at its annual shareholder meeting, but we aren’t waiting by our iPhones. Shares of GMCR increased from $41.34 to $56.76 in the quarter.

In addition to MRVL and the Yen, Vodafone (UK: VOD) was another material winner during the quarter. It is now clear that Verizon does in fact want to buy VOD’s 45% interest in Verizon Wireless. We can hear them now. We believe that a premium sale followed by a successful return and/or redeployment of the proceeds could unlock substantial value latent in VOD stock. VOD without Verizon Wireless might also become a good acquisition target for AT&T. During the quarter VOD shares advanced from £1.54 to £1.87.

MRVL reversed its 2012 decline as investors began to pay attention to MRVL’s prospects for share gains in controllers for hard disk drives and flash memory drives, as well as its new processor for cell phones and tablets. The company should see significant fixed operating leverage in 2013, as it has been carrying the cost of the investments in these products without any corresponding revenue until now. The company has also continued to buy back stock aggressively, adding to the potential earnings leverage.

We initiated a long position in Evonik (Germany: EVK), a global chemical business, through a private placement at an effective price of €29.13 per share, ahead of a public listing in April. EVK has a high quality portfolio of chemical assets in the U.S., Europe and Asia, including market leadership in methionine, a high margin, high structural growth business that tracks the demand for animal feed. EVK’s business is less cyclical than that of its European peers as demonstrated by its positive EBITDA growth each year even during the recession. EVK is currently in the middle of a capital investment cycle that we believe will enable it to grow its earnings power from €2.50 in 2012 to €4.00 per share in 2015/2016. We think that its combination of secular growth, superior asset quality, and low cyclicality makes EVK the premier European chemical company, which deserves a rerating to a premium multiple.

We initiated a long position in Oil States International (OIS), a solutions provider for the oil and gas industry, at an average price of $77.16 per share. OIS has four business segments: Well Site Services, Tubular Services, Offshore Products, and Accommodations.

We believe that the company trades at a significant discount to the sum of its parts. Though the shares trade at slightly less than 7x 2013 EBITDA (a multiple typically associated with its lower multiple businesses), the majority of its profits come from Accommodations, which is a high growth, high return-on-capital segment that deserves a much higher valuation. At 8.6x 2013 EBITDA, an appropriate multiple given a sum of the parts analysis of OIS’s business mix and where comparable companies trade, OIS would be worth close to $120 per share. We believe that OIS could unlock significant shareholder value by converting the Accommodations unit into a REIT and separating it from the rest of the company; if completed, it would suggest a valuation of $155 per share.

We closed several positions during the quarter including longs in Ensco (ESV) and Xerox (XRX), and shorts in Avalon Bay (AVB) and MBIA (MBI).

We bought ESV, an offshore contract oil driller, after the Macondo oil spill. At the time, we believed that the shares were depressed over fears of curtailed offshore drilling. Subsequently, the fears were resolved and the drilling business recovered. We earned a 34% compounded return over our 4+ year holding period. The return was helped by favorable trading around the position. We sold in order to redeploy the capital into OIS.

XRX did not perform as well as we had hoped. We bought the shares based on expectations that synergies from its acquisition of Affiliated Computer Services would lead to revenue growth and margin improvement. Unfortunately, the company did not deliver.

Despite this, we sold the shares for a modest gain.

We finally gave up on our short of AVB. Our initial short in early 2007 worked nicely during the credit crisis, but we overstayed our welcome. It is a mediocre business with cyclical risk and an extreme valuation due to its REIT nature. Nonetheless, the company recently acquired Archstone  properties and issued a lot of stock. The shares declined from their recent highs and we took the opportunity to admit defeat and exit with a loss.

During the quarter, we finally declared victory on our MBI short, which we have held in some capacity since 2002. It was rough sledding for the first five years until the stock collapsed from $76 to $2 between 2007 and 2009. This was another case of a misunderstood business and a management team engaged in assorted accounting and business chicanery. While it is possible that sleepy regulators will ultimately put this company and its management out of their misery, the opposite seems equally possible. We’ve decided to enjoy the healthy profit we made and step aside for the time being. Cumulatively, this was the third most profitable short position in our history.

* * *


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Fri, 05/10/2013 - 14:29 | 3549166 Element
Element's picture

Have a look what gold did from Pre Bear Sterns collapse to end of 2008, big swoon.


Fri, 05/10/2013 - 15:01 | 3549286 flacon
flacon's picture

> "Curious That Gold Isn’t Doing Better" Yeah, no shit!

Fri, 05/10/2013 - 15:18 | 3549305 Element
Element's picture

In 2008 it did what it is doing now.

Recession, FIRE sector sickness, Bear Sterns, BIS warning, Lehman's, then rapid sustaind price rise trend.

And in late 2011 Europe again stated to go into recession and the banks all got sick again.

So similar conditions now, to 2008, and BIS warning occurred last December.

So gold is behaving similarly too to what it did during 2008.

Liquidation stopped after Lehmans ... then price exploded ... untill late 2011 when it began the swoon into the European recession and global slowdown.

Get big banks failing now, the gold liqidation cycle will cease, and price will pop.

So it will take more recession and bigger banks getting into serious trouble, credit freeze - POP!

Until then it will probably continue this price swoon.

Fri, 05/10/2013 - 15:19 | 3549349 fonzannoon
fonzannoon's picture

I am an unabashed gold bull, despite what my conversation seems like below. Did 2008 last for two years? because this stretch seems to be a bit longer? Can I ask these questions without being thrown into the troll pool?

Fri, 05/10/2013 - 15:45 | 3549357 Element
Element's picture

QE happened. Banks are being recapped, so it takes longer for them to bust in the recession, plus recession is shallower and weaker, but longer.

I'll make a testable prediction: 

Find a vulnerable TBTF (any will do), naked-short it to oblivion and collapse, the gold price will pop and surge to record highs for several years ... or longer.

Fri, 05/10/2013 - 16:18 | 3549515 James_Cole
James_Cole's picture

Find a vulnerable TBTF (any will do), naked-short it to oblivion and collapse, the gold price will pop and surge to record highs for several years ... or longer.

Good way to lose all your money. 

Gold market is moving very predictably right now, it's not complicated.

Hint that Fed is maybe pulling qe and what is the immediate knee-jerk in gold??

Fri, 05/10/2013 - 16:26 | 3549531 Element
Element's picture



Hint that Fed is maybe pulling qe

Not in this universe.

Fri, 05/10/2013 - 16:36 | 3549554 James_Cole
James_Cole's picture


Hint that Fed is maybe pulling qe

Not in this universe.

I'm saying - consider the implications of how the market reacted to the mere hint (a consistent reaction every time this is suggested as a possibility) relative to theories about phys shortages, JPM blah blah blah etc. 



In a lot of ways people are currently buying gold for the same reason people are buying DIA with the same fundamental support.


Junk away. 

Fri, 05/10/2013 - 16:53 | 3549614 Element
Element's picture



Has any one junked you yet? ... no.

Given what you say, on a rumor, imagine a large bank actually going down ... now how do I lose my money again?

Fri, 05/10/2013 - 16:58 | 3549633 James_Cole
James_Cole's picture

Has any one junked you yet? ... no.

You spoke too soon.

Given what you say, on a rumor, imagine a large bank actually going down ... now how do I lose my money again?

If you have really good inside info, OK, go for it. Failing that, naked shorting is generally a bad idea. Combining naked shorts with TBTF? Terrible idea. 

Fri, 05/10/2013 - 17:51 | 3549800 Element
Element's picture

 lol ... wasn't me.

That experimental test was run in August-Sept 2008 on a vulnerable TBTF ... and it wasn't too big to snuff.  As for inside info, it has been suggested at least on other TBTF did it.

It illustrates that if the economy is bad enough, the real one that is, big banks, not actual TBTFs, but big enough, are going to fall apart in numbers.

QE stopped the collapse avalanche last time, but gold was out the gate and still shot-up.

So it is the growing instability of banks that leads to actual major bank failures, and credit freezes, that is the key to another major gold POP and run in my view.

We are in a preparatory phase, and that can last for a longish time.

Fri, 05/10/2013 - 15:44 | 3549422 DoChenRollingBearing
DoChenRollingBearing's picture

@ fonz

+ 1

Gold has had a huge run since 2001, even a two year stagnation means little.  Long term thinking (IMO) is the way to go re gold.  Think intergenerational...  Our friends the Rothschilds have been doing this, for what, almost 200 years?  (Even for the Legion here who hate the Rothschilds does not mean you cannot learn from them...)  

Your children and grandchildren will be very happy to have had you save in gold.

Fri, 05/10/2013 - 15:46 | 3549429 fonzannoon
fonzannoon's picture

Very well put. Thank you.

Fri, 05/10/2013 - 15:54 | 3549446 BLOTTO
BLOTTO's picture

Just posting as it mentions one of our favourite websites...from todays Chuck Butler article...the currency guy and friend of Gold.


'Then There Was This. I was looking through one of the websites I always tell you is one of my faves to visit,, and came across an interview with James Grant. I've always been a fan of James / Jim Grant, reading his newsletter over the years has given me some great insight into the markets.  Here's Jim Grant on Gold:

"Gold has been in a bull market for 12 years. Gold is this rare thing in which you can be bullish and yet contrary and also with the trend. There is I think a general fatigue animus towards gold. The gold prices are reciprocal of the world's view of the competence of central banks. The greater the world's confidence in the Ben Bernanke's of the world, the weaker the gold market. The less the world holds confidence in the institution of managed currencies, the stronger the gold market. And to me the confidence is utterly misplaced.'

Fri, 05/10/2013 - 15:53 | 3549447 Element
Element's picture

You're welcome

Fri, 05/10/2013 - 17:01 | 3549639 fuu
fuu's picture

Element = DCRB?

Who knew?

Fri, 05/10/2013 - 14:29 | 3549167 LoneStarHog
LoneStarHog's picture

"Curious"? .. Pull your head outta your ass!

Fri, 05/10/2013 - 14:33 | 3549187 Joe Davola
Joe Davola's picture

The biggest problems with our AAPL investment are disappointing earnings and a diminished forecast.

Cue Reggie...

Fri, 05/10/2013 - 15:00 | 3549282 Pladizow
Pladizow's picture

To: LoneStarHog

With the use of the word "curious", David was being extremely diplomatic!

Fri, 05/10/2013 - 15:04 | 3549299 LoneStarHog
LoneStarHog's picture

Understand...but...Diplomacy = Bullshit!...Tell David to either have the BALLS to speak directly/honestly or to just STFU!

Fri, 05/10/2013 - 15:27 | 3549371 Pladizow
Pladizow's picture

That would not help gather AUM!

Fri, 05/10/2013 - 14:52 | 3549259 NotApplicable
NotApplicable's picture

Given the longs either get Corzined or Paulsoned, what mechanism exists for true price discovery? Only the shorts seemingly have a safe haven to operate from.

The only thing curious is how the author could fail to observe this.

Fri, 05/10/2013 - 15:02 | 3549287 LoneStarHog
LoneStarHog's picture

"The only thing curious is how the author could fail to observe this."

Being merely "curious" still gets one invited to all the Whore Street parties.

Fri, 05/10/2013 - 16:38 | 3549574 James_Cole
James_Cole's picture

Only the shorts seemingly have a safe haven to operate from.

Fri, 05/10/2013 - 14:31 | 3549179 fonzannoon
fonzannoon's picture

Hmmm (scratching beard) yesss.....hmmmm Kyle Bass goes on Bloomberg and says the same thing after he recently sold 400 bil of bullion.....hmmmm I wonder If he and Einhorn talk....

Fri, 05/10/2013 - 14:33 | 3549184 W T F II
W T F II's picture


Fri, 05/10/2013 - 14:49 | 3549224 Quinvarius
Quinvarius's picture

He didn't sell any gold.  400 billion worth is more gold than the US government has anyway.  Adjust your rumor.  Infact, the US national debt of 17 trillion and the US M3 money supply + all credit of another 80,000 billion is backed by under 400 billion in gold.  Hence, it is going a lot higher.

Fri, 05/10/2013 - 14:53 | 3549257 fonzannoon
fonzannoon's picture

Well excuse me. The UT of which he is one of the fiduciary's of their funds....SOLD 400 million dollars worth of their 1.4 billion in holdings.

Sorry if I was off by several hundred billion and some change but I figured you got my point.

He also has said in the past that if they sold the gold, he would resign. But I am still waiting for that.

Fri, 05/10/2013 - 15:02 | 3549289 Quinvarius
Quinvarius's picture

Now all you need to do is adjust your rumor that Kyle Bass and his fund Hayman Capital sold gold down by another 400 million in gold, to zero.   UT made their own decision to move from bullion to futures against Kyle Bass' advice.  Thanks.

Fri, 05/10/2013 - 15:10 | 3549322 fonzannoon
fonzannoon's picture

Please show your proof that it was against his advice.


Fri, 05/10/2013 - 15:19 | 3549347 Quinvarius
Fri, 05/10/2013 - 15:35 | 3549375 fonzannoon
fonzannoon's picture

I believe that he has made it clear that he did not want them selling. I find it really odd that they decided to do so right before the price got smashed. I realize they bought gold futures. I just find it funny seeing him on Bloomberg scratching is head about the whole thing after the timing of that move.

I'm getting tired of these smug guys and their smirky curious smiles being put up everyday as advice.

Fri, 05/10/2013 - 15:43 | 3549419 kito
kito's picture

you see fonz...ive been warning you about bass for a while....................stop listening to the book talkers..................and the pundits........and the traders..............just listen the birds outside your window.................and all will be well.............ohhhhmmmmmmmmmmmmmmmmm...


Fri, 05/10/2013 - 16:09 | 3549484 Urban Redneck
Urban Redneck's picture

They didn't sell the gold right before the price got smashed, the news hit the wire right before the price got smashed, but the news was relating to the portfolio changes in previous reporting period.

Fri, 05/10/2013 - 15:07 | 3549309 TheEdelman
TheEdelman's picture

Maybe the UFO encounter did something to Fonz.  It was $375M and they supposedly reinvested in gold futures and emerging equities.  Just the stuff Kyle likes.  

Not betting on a resignation.  Same ole Hayman Capital investors pep rally presentation at SIC last week.

Lets recap Gold shall we?

Einhorn – Yes

Klarman – Yes

Bass – Yes

Singer – Yes

Gross – Yes

Druckenmiller – No

Grantham - No

Rosenberg – Undecided

Fri, 05/10/2013 - 15:13 | 3549329 fonzannoon
fonzannoon's picture

"It was $375M and they supposedly reinvested in gold futures and emerging equities. Just the stuff Kyle likes."

I was off by 3 hundred billion plus originally and could not edit my response. What is another 25 bil between friends.

Yes, They did buy gold futures. According to the last month on here, that was one hell of a risk. I hope it was worth it for them.

Fri, 05/10/2013 - 15:17 | 3549343 TheEdelman
TheEdelman's picture

hehe all good.  its all funy money at this point anyway

Fri, 05/10/2013 - 15:45 | 3549426 kito
kito's picture

that funny money still pays the mortgage, the rent, the car lease, the groceries, and everything else you need to subsist............everybody is so smug about how its all funny problem.....send me whatever dollars you dont want.....................

Fri, 05/10/2013 - 17:11 | 3549673 TheEdelman
TheEdelman's picture

well well well.....fonzs muscle arrives.  

With context... in a blog post about billionaires:

Funny money to the privileged... this exludes ZH and its entourage.  But we knew that. 

But youre right.  Now that I retype that phrase.  It does sort of bug doesnt it?

Fri, 05/10/2013 - 17:13 | 3549679 fonzannoon
fonzannoon's picture

LOL I don't need muscle, at this point you all can just ignore me and I will end up arguing with myself.

Fri, 05/10/2013 - 15:41 | 3549414 Big Beta Bill
Big Beta Bill's picture

Soros - Yes

Buffett - No

Fri, 05/10/2013 - 14:32 | 3549183 Randall Cabot
Randall Cabot's picture

Man, this Einhorn dude is sharp as a tack

Fri, 05/10/2013 - 14:44 | 3549222 Bay of Pigs
Bay of Pigs's picture

Some of the gold "experts" really seem to have no clue either (in this case below, Doug Caseys guy). It is surprising and somewhat embarrassing they haven't followed the facts that Chris Powell of GATA has compiled over the last 15 years. These are indisputable facts, straight from the mouth of Central Bankers themselves.

Fri, 05/10/2013 - 14:52 | 3549260 fonzannoon
fonzannoon's picture

Throw Schiff in there as well, and I love the guy. I still agree with his overall prediction but boy have these guys all gotten it wrong constantly saying it will go higher every single time they speak.

Fri, 05/10/2013 - 17:09 | 3549662 kito
kito's picture

your kids go on club penguin???? 

Fri, 05/10/2013 - 14:38 | 3549188 THE DORK OF CORK
THE DORK OF CORK's picture

Double post.


Fri, 05/10/2013 - 15:09 | 3549189 THE DORK OF CORK
THE DORK OF CORK's picture

Its simple ...........most of Europe bar Germany , France and the UK have run out of cash flow.


Maybe somebody somewhere  took advantage of the weakness but the weakness is easily seen.


If you consider CBs as private banks who loaned out gold during (causing) the boom then they seem prepared to cause a depression in rich gold areas such as Italy so as to get the stuff back.


Italy was a big economy at one time.............

It was bigger then the UK.

Now not so much.

Add in Iberia , Greece , Ireland.....etc etc and you can flush out a serious amount of gold from private hands.

All you need to do is destroy their business and therefore cash flow........


Then just sit back and wait.


PS - just imagine

Every man woman & child in Ireland has 10,000 ~ euros less in his pocket then in 2007

Thats 10,000 euros every fucking year.

Add that up with all the other euro economies in a similar deflation and you are talking about serious anti money.


The banking system has complete control of the money supply.

It can play with people like rag dolls.


The physical economy has no meaning to them other then a short & long term mechanism  of extraction.


One must only keep changing the rules.

Fri, 05/10/2013 - 16:28 | 3549542 DoChenRollingBearing
DoChenRollingBearing's picture

Those are terrible losses.  Ireland has suffered mightily, and yet you never read about it (in the USA anyway).

Fri, 05/10/2013 - 16:57 | 3549631 THE DORK OF CORK
THE DORK OF CORK's picture

Its locked within the Irish national accounts  , I will try to get it.

But Gross national income was 37,000+ euro in 2007.

In 2011 it was 28,000+  


It depends on what population they use etc etc.

But  it was probably 27,000 ~ in 2012.

Fri, 05/10/2013 - 14:33 | 3549190 q99x2
q99x2's picture

Be patient unless you are going to die tomorrow buy more. Be happy.

Fri, 05/10/2013 - 14:34 | 3549193 Randall Cabot
Randall Cabot's picture

In other news, oil just shot up 2 bucks!!!

Fri, 05/10/2013 - 14:35 | 3549197 Chupacabra-322
Chupacabra-322's picture

No shit Sherlock!!!

Fri, 05/10/2013 - 14:38 | 3549198 W T F II
W T F II's picture

He shoulda ended it with..."here are some pictures of my new Beach House. I appreciate your continued confidence and loyalty. We will REALLY TRY to beat the S+P sometime in the near future...Please buy some more I-Pads in the coming days and weeks..."

Fri, 05/10/2013 - 14:40 | 3549215 rosiescenario
rosiescenario's picture

In case others here missed this item today,:


"Via email, Princeton economist Paul Krugman expanded on this theory:

I don't really know, although at some level I'm not surprised: finance types just hate, hate easy money policies, although you would think that these policies are often good for their bottom lines. I do wonder in this case whether there's extra hatred of Bernanke because he keeps proving them wrong: they keep predicting terrible things from QE, runaway inflation, and all that,and instead the bearded academic stuff keeps turning out right."


"stuff keeps turning out right"....that certainly must be referring to the numbers on food stamps....stuff has really turned out right for them...

Fri, 05/10/2013 - 14:45 | 3549235 W T F II
W T F II's picture

those Tigers stick together. He probably likes Brooke Shields, too.....

Fri, 05/10/2013 - 14:46 | 3549244 W T F II
W T F II's picture

Did he just ADMIT that QE is accretive to financial assets and their purveyours...?? Yup, HE DID...!! Wadda 'bout JOBS, "Krugsy"...??

Fri, 05/10/2013 - 14:56 | 3549271 NotApplicable
NotApplicable's picture

Don't worry, none of his buddies will connect those dots.

Fri, 05/10/2013 - 15:07 | 3549310 cougar_w
cougar_w's picture

I guess that since QE policies haven't directly resulted in any cities set entirely on fire, it's all good?

The problem is these guys have no sense of stewardship. It doesn't matter to them that saving the present while enslaving the future is just wrong, pure and simple. They just cannot think beyond the current quarterly results.

This is the damage that our universities have done over 50 years: Created "bearded academics" you cannot actually think clearly about consequences.

It's going to take 100 years to purge this silliness from the human experience. We haven't even started the processes yet.

Fri, 05/10/2013 - 14:42 | 3549219 FinancialPanther
FinancialPanther's picture

If you don't understand why gold isn't meeting your expectations then your expectations are based on flawed understanding of the gold market.  Simple as that.

Fri, 05/10/2013 - 14:42 | 3549227 Debugas
Debugas's picture

since every dollar /euro / other fiat currency unit is issued as debt the end result of it is deflationary pressure everywhere where fed/ECB/ other CB is not printing in sufficient quantities.

that is why gold is not performing (CBs not printing enough to offset deflation)

Fri, 05/10/2013 - 14:52 | 3549228 Bam_Man
Bam_Man's picture

Have a look at what Gold did between Dec. 1974 and August 1976.  Dropped from $185 to $103. Then increased 800% over the next 40 months.

Just be patient and let the Central Bankers & politicians keep doing what they do.

Fri, 05/10/2013 - 15:04 | 3549297 Bay of Pigs
Bay of Pigs's picture

Yes, people have very short memories. Gold dropped over 30% and silver over 50% in 2008. The ensuing rally then took gold from $692 to near $1900 and silver from around $9 to $48 in under 3 years.

We havent even begun to see the real fireworks yet. 

Fri, 05/10/2013 - 17:05 | 3549648 ParkAveFlasher
ParkAveFlasher's picture

No "circuit breakers" or "safeties" on gold to the downside.  Only to the upside, when a year's production in paper gets dumped. 

Stocks have circuit breakers to the downside, but not on the upside.

Now which of the two are the exchanges trying to maintain volatility and to the up or down, and why?

Fri, 05/10/2013 - 14:58 | 3549251 THE DORK OF CORK
THE DORK OF CORK's picture

@ Debugus

CBs don't really print.

Its the executive - which is captured by the banking system

The banking system just wants to maintain its claims over shrinking economies.


By driving down interest rates it can destroy people who need yield.


If I own $100 million and live a frugal life.........................I can afford to wait.

I don't need a yield for many years.

When the economy is destroyed I can then snap up "assets."


The banks will then instruct the captured congress  / exectutive  etc etc to print in the interests of the people................

One can then capture the new flow with your new assets.

Wonderful is it not ?


One must try to get into the minds of the rich who hold the levers of power.


"You're right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I'll have to close this place in... 60 years"

Fri, 05/10/2013 - 14:59 | 3549279 cougar_w
cougar_w's picture

I suspect that since the Central Banks failed to destroy the world as expected a lot of holders are exiting gold at the top.

They never intended to hold anyway. It was just a speculative play. As they exit the price will fluctuate.

There is a lot of nervous energy right now in and outside financial markets. Our global kit is coming seriously unwired. Nobody is sure what to do. The CBs rolled the bones ... and didn't exactly lose everything in the gamble. So maybe they can keep up their streak? People think that.

Nope. They cannot. Physics and entropy are against them. I'm not invested in gold, don't care where it goes, but regardless the CBs are not going to steer this ship off the rocks and it is going to come apart in the storm. Their countless monetary policy gimmicks have only bought them some time, and not much of that.

I still think the signs point toward a late-summer scramble for security leading into a winter of massive losses when secure positions come unglued. We will exit 2013 in mounting horror and H1 2014 will see the wheels completely come off amidst a howl of denial and demands that "someone do something".

I don't know what happens in H2.

I guess we'll be finding out.

Fri, 05/10/2013 - 15:03 | 3549294 Bam_Man
Bam_Man's picture

Quite possible.

I think we may soon get a glimpse of what the "Keynesian Endgame" actually looks like thanks to Japan. It will not be pretty.

Fri, 05/10/2013 - 15:13 | 3549331 cougar_w
cougar_w's picture

I really wish I could sneak a look at their playbook.

The wind-down is going to be all seven kinds of horrific. I'm left wondering what earthly good they see coming from that. I understand that they were able to enrich their field, preserve the status quo, and keep people moving along in their hopeless lives for another 5 years.

But for what possible purpose? Where are they going with all this? The paper "wealth" they have preserved will explode all the same, but make an even larger crater than it might have if left to die a natural death. Why do it?

People here say, they actually want a larger crater. Well I'm starting to wonder if maybe they might after all.

My capacity to reason around this is failing.

Fri, 05/10/2013 - 15:42 | 3549416 Rustysilver
Rustysilver's picture


I don't disagree with you. I don't know what's going neither  anybody else. I don't care how well they're connected.

But, I am always dubious that SHTF 6 months or a year from now. Just review all the threat about Greece, Spain, Italy, etc. and you will see what I mean.

Fri, 05/10/2013 - 16:06 | 3549481 cougar_w
cougar_w's picture

It's been coming apart for 5 years already. This is a slow-motion train wreck, but a wreck all the same. TPTB have been furiously papering over the damage because in the slow collapse they can just manage it. But the wreckage is accumulating, it is becoming more clearly a derailment, and I think they have run out of both means and interest in making things appear otherwise.

Japan is about to lead the way among the G7. They've taken a huge hit and will not get back up, they are effectively finished already, we need only wait for their massive economic engine to roll to a stop. France is a tottering wreck lurching from one policy catastrophe to another. Italy is one really bad electoral season away from a return to Fascism. Spain is set to go up in absolute flames -- again. Germany will be dragged into ruin by all this.

And then there is America. 300 million guns is the only thing left standing between us and a rampant complete corporate takeover of the government. Eventually we'll be paying to use the sidewalks and park benches, at which point we go ape-shit crazy. The killing here will be unimaginable, unequaled in the entire history of humankind.

In 6 months. Or in 16 months. Or in 60 months. It hardly matters when. Nobody is going to like it at all, nobody is going to get rich, nobody is going to recognize the world afterwards.

Fri, 05/10/2013 - 16:46 | 3549602 Rustysilver
Rustysilver's picture



I was anticipating some European Country popping first.  I would not be surprised if US did a big dump ( I am in Ct).  I trying to stay prudent. I am sure other guys here are doing the same.

Fri, 05/10/2013 - 21:50 | 3550511 Element
Element's picture

It's all a spectrum Cougar, Detroit, or at least parts of it are kaput, simultaneous with excess and affluence in the same country. That's how it will be. If you read Selco's SHTF site, you'll notice he says somewhere that some cities and towns were significantly better than others in his case, though all sucked compared to defended rural areas which had more access to food production and supply. WWII lasted a lot longer in China than it did in Europe, but within the same sequence of general conflicts. I sure would not want to be in MENA though. I think the US will do much better than many expect, as it has a lot of soil and a lot of potential Labor, and a lot of energy, and those will be rationed. As long as people are not driven to complete hunger and desperation they are less likely to generally rampage and SHTF fully. Violence will go up in waves, but more like a favela insecurity, than a proper SHTF every man for themselves. It will still be state on state wars that will be the most dangerous, for civilians, and also how the state conducts itself. And that's why you have guns, no? To make sure the State behaves itself. If it does, then things won't reach a full SHTF collapse. But in pockets within the US it may come close for a while.

Fri, 05/10/2013 - 15:03 | 3549292 Inthemix96
Inthemix96's picture

Thread jack for the second time on the same subject.

Listen up my American friends and book mark this henious bitches name 'Harriet Harman'.

This filthy piece of work was in our last Labour government, and she wants the legal age of sex brought down to 12 years of age, thats right, this filthy fucking nonce protector wants kids to be abused from the age of fucking twelve.

You see the effects of dumbing down people?  These bastards are in the fucking government as oposition, and propose outright filth like this?  Look this up folks, this hidious excuse of a person claimed through her expenses account porn for her husband (true), and wants children, very young ones to be able to have sex at the age of twelve and up?  This smacks as someone not just fit for office but fit for being fucking jailed.

If this filth passes the corrupt and full of fucking peodophiles and thieving cunts house of lords we will see the age of consent being lowered to twelve.  Mark my words, if this happens here, it will happen to you lot.  These fucking lunatics are out of control and passing bills that make a mockery out of justice that would make a fucking whore blush.

This shows you time is running out, and its running out fast, we need action, and we need it soon.

Fri, 05/10/2013 - 15:29 | 3549378 Inthemix96
Inthemix96's picture


Which one of you would like to see the age of your kid having sex reduced to the age of twelve then?

You sick fucking bastards.  Are you fucking insane or inbred?  Down voting someone who doesnt think little children should be engaging in things like this?

I fucking give up, some of you make me fucking sick.

Explain yourselves you heartless cunts, come on then, give me an explanation why you think this is OK.

Fri, 05/10/2013 - 20:46 | 3550350 MeelionDollerBogus
MeelionDollerBogus's picture

there's no way you can stop it except to chain them up. Not all kids will go have sex at age 12 but some will. It's nature. It's not a morality question. It can't be a morality question. now ADULTS seeking sex with children... that's what nooses are for.

Fri, 05/10/2013 - 15:36 | 3549395 Diogenes
Diogenes's picture

In some Southern states the age of consent is 13.

(this was a reply to your first post. It was written before I saw the second. I give this purely for information and do not have an opinion to express one way or the other)

Fri, 05/10/2013 - 15:38 | 3549403 Inthemix96
Inthemix96's picture


Are you being serious?  As I find that unbelievable??????

These are children friend, these are not grown up folk eho know their own mind?????????

Fri, 05/10/2013 - 15:55 | 3549452 dark pools of soros
dark pools of soros's picture

there's an online age of consent map somewhere in the interwebs


but lots of fine print to that..  usually lets bf/gf's in highschool avoid the problem of one coming of age before the other and most need parents approval, etc..



Fri, 05/10/2013 - 17:27 | 3549736 americanspirit
americanspirit's picture

Age of consent in those states is 13 only among cousins or closer family - for everybody else it's 15.

Fri, 05/10/2013 - 15:05 | 3549303 RopeADope
RopeADope's picture

I used to be a fan of Einhorn till I noticed he stretched the truth in his GMCR presentation. It wasn't 500,000 brewer units at issue but rather a 500,000 sq ft warehouse with allegations of inventory problems per the whistleblower.

Fri, 05/10/2013 - 15:08 | 3549313 holgerdanske
holgerdanske's picture

Just btfd.
It is a gift at these prices, if you are able to park some cash.
Clench your teeth and get some physical.

You will be glad you did

Fri, 05/10/2013 - 15:15 | 3549336 Fuh Querada
Fuh Querada's picture

Apologies for OT: Mythe Blasters being set up?

Keiser Report #442, second half interview with Pierre Jovanovic out of Paris, also some interesting stuff on Hollande

Fri, 05/10/2013 - 15:49 | 3549434 dark pools of soros
dark pools of soros's picture

I thought all youse guys care about is stackin?  lower price, more stackin' right?  Not like any of you are ever going to sell right?  so why the desire for higher price?


if none of you sold when it was 1900 you don't have to worry about selling for a while..  so relax and just keep stackin'


Fri, 05/10/2013 - 16:15 | 3549450 WhiteNight123129
WhiteNight123129's picture

Einhorn does not get it. He is not a commodity guy by any stretch of the imagination. Jimmy Rogers knows one or two things about supply demand. Industrial commodities are not the place to be, but soft still will be.

Druckenmiller is dead right about China, about Australia mines but I think he was caught his pants down by saying.

"The last 11 years was an aberration, a deviation from the long-term trend of declining commodities prices as technology reduced the cost of extraction.”

His statement is only true at constant resource quality, once you have exhausted your Saudi oil and you try fracking and or tar sands, sure your technology is better but the slope is much steeper.

Jemery Grantham knows Malthus is right, he knows history prior to coal and how population had declined in XIV century, boomed during the Renaissance and stagnated in XVII century reached limits in second half of XVIII century and then boomed again with new land in America and hydrocarbon "endless" supply.

Unless you can grow the world food consumption in a flower pot (Ricardo), Malthus is right and Druckenmiller argument that better technology = lower cost of commodities is wrong.

It works only if you have constant resource quality, if the highest quality is not enough to cover all demand, it is priced at the margin by the lower quality oil. Now as the cheapest oil is depleted while total demand expands you have to go into even harder to get oil. So your muscles (technology) get stronger but the mountain slope get steeper as well.



Fri, 05/10/2013 - 16:59 | 3549630 silverserfer
silverserfer's picture

the thing with gold is that the people with the most control the flow of the large quantities and suck it in and lease it out all with the intention of bringing it all back in and making money while doing it. the price, and availabilityof gold for us small fish doesnt make sense because we are being jerked around by the big fish and we are only pecking at the tiny bits after they make a big kill such as taking down a government or murdering an oilgarch for their gold. 

Fri, 05/10/2013 - 20:38 | 3550327 NoWayJose
NoWayJose's picture

It will David, it will....

Sat, 05/11/2013 - 12:19 | 3551472 rekfhardy
rekfhardy's picture

Izabella Kaminska has been writing on F/T Alphaville blog about gold since 2008 slowly  morphing from "stock" to "collateral" as interest rates approached, and then are held at, zero bound. She first started commenting on this in Dec 08, and since has published 10 or so compelling blog articles concluding that gold has become at times  a" new" form of carry trade collateral , those times when there was a dollar collateral shortage in the banking system . In her May 1 2013 piece titled "Gold as Collateral, not stock"she sums up the thesis quite well, would urge all to read this piece, indeed the entire series, and become familar with the consequences for the gold price when it is possible to lend money against gold and earn a return that beats Libor. FYI, dh

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