Horrible News For Goldbugs - Paulson Is Bullish On Gold Again; Next - Roubini?

Tyler Durden's picture


We wish we had good news, but we are not going to lie: This is the worst possible news for any gold bull out there.

From Bloomberg:

Gold traders are getting more bullish after billionaire hedge-fund manager John Paulson told investors it’s time to buy the metal as protection against inflation caused by government spending.


“By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold,” New-York based Paulson said in a letter to investors obtained by Bloomberg. Armel Leslie, a spokesman for Paulson, declined to comment.


The 56-year-old manager’s SPDR Gold Trust holdings fell 15 percent in the fourth quarter as his $23 billion hedge fund company had its worst-ever year. His Advantage Plus Fund lost 51 percent in 2011, and the firm said in a third-quarter letter that financial services companies were the “primary drag.” Paulson became a billionaire in 2007 by betting against the U.S. subprime mortgage market. Gold rose 10 percent last year in New York trading, an 11th consecutive annual gain.

And so the Paulson overhang is back. Couldn't Paulson just go ahead and buy Bank of America or some other worthless biohazard again?All that remains is for Roubini to say he prefers gold over spam (and always has, he was merely "misunderstood") and the crash will be imminent.

Or perhaps we will learn following the next $1000 up move in gold that Gartman will have been long gold in Vietnamese Dong.

Well, at least cheap entry points will be available.

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Fri, 02/17/2012 - 16:54 | 2171270 mayhem_korner
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Well, at least he's "transparent."

Fri, 02/17/2012 - 16:57 | 2171294 Roger O. Thornhill
Roger O. Thornhill's picture

This is troubling. But, luckily I bought the bulk of mine a long time ago.

There is always the 'broken clock' theory with him. Best I can hope for.

Fri, 02/17/2012 - 17:02 | 2171318 Tucson Tom
Tucson Tom's picture

Roger that,Roger!

Fri, 02/17/2012 - 17:09 | 2171362 ihedgemyhedges
ihedgemyhedges's picture

"What's your vector Victor?"

Fri, 02/17/2012 - 17:18 | 2171392 francis_sawyer
francis_sawyer's picture

"Give me a clearance, Clarence..."

Fri, 02/17/2012 - 20:52 | 2171967 Pladizow
Pladizow's picture

Better chance of Gartman having a Long Gold Vietnamese Dong some where else!

Fri, 02/17/2012 - 23:07 | 2172214 TheFourthStooge-ing
TheFourthStooge-ing's picture

It just dawned on me how this will play out and, as weird as the world has been getting, it makes perfect sense. Paulson, now bullish on gold, will be simultaneously proven correct and have his biggest loss yet.

How will this happen? While his call on gold will be correct, his investment will be in GLD. He's not buying metal, he's buying promises. His assumption that the system will continue to function normally has blinded him to the actual underlying reason that gold is a good investment: it is real.

The value of GLD depends upon the integrity of a chain of promises, and the breaking of any of these promises puts the value of GLD at risk. Gold, on the other hand, doesn't depend upon the promises of anyone, nor does it depend upon the integrity of anyone other than an assayer. In fact, being long physical gold is like shorting the honesty and integrity of Wall Street, the Federal Reserve, the City of London, and Vichy DC.

Paulson will lose his ass when the prices of gold and GLD decouple. Gold will skyrocket, and Paulson will be stuck holding unredeemable paper promises backed by vaporized gold.


Fri, 02/17/2012 - 23:44 | 2172286 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1  

Very good!

FOFOA-like even...


Sat, 03/24/2012 - 17:57 | 2287180 MeelionDollerBogus
MeelionDollerBogus's picture

Well, for now GLD vs spot gold shows:


a pretty accurate overlay. Ratio shows:


steady 10.28 to 10.3x GLD = gold spot

so while I fully expect GLD one day to fail while gold spot (real physical) goes up...


for the time being I expect that if gold makes big swings up or down then options on GLD will still return big. IN particular I'd say a GLD call more than 100 days out or a GLD strangle 60 to 90 days out ought to do OK. What harm can it do to put in 1 to 3 contracts each in that position... just to see how it turns out.

http://flic.kr/p/bpJpXX future projection model for gold spot

Fri, 02/17/2012 - 22:40 | 2172173 A Nanny Moose
A Nanny Moose's picture

Ever seen a grown man nekkid?

Fri, 02/17/2012 - 17:19 | 2171401 goldfreak
goldfreak's picture

shirley you can't be serious?

Fri, 02/17/2012 - 17:20 | 2171410 Turd Ferguson
Turd Ferguson's picture

I'll be more nervous when Robot Trader finally goes long.

Fri, 02/17/2012 - 17:24 | 2171424 tmosley
tmosley's picture

He never "goes" anything, he'll just claim he was long all along.

Fri, 02/17/2012 - 17:43 | 2171508 zerotohero
zerotohero's picture

Long Dong.....Vietnamese of course.

Fri, 02/17/2012 - 19:39 | 2171827 Don Birnam
Don Birnam's picture

"Dong ? No dong. We trade in ROK won, exclusively."

Bang Dae-Ho, CFA

Fri, 02/17/2012 - 20:27 | 2171922 LongSoupLine
LongSoupLine's picture

"No mowr yankee on my wanky..." - Long Duck Dong

Fri, 02/17/2012 - 20:33 | 2171935 longdong silver
longdong silver's picture

Wha?  huh?

Fri, 02/17/2012 - 17:45 | 2171518 DoChenRollingBearing
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Ha ha!  + another one for the Turd!

Fri, 02/17/2012 - 18:41 | 2171682 HoofHearted
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And I'll be worried about what's happening at Megiddo when Nadler finally gets bullish...

Fri, 02/17/2012 - 20:21 | 2171911 JonNadler
JonNadler's picture

you know....gold doesn't look so bad right now......., he he, nah just teasing you boys    

Gold to 300 by year end!!!!

Aren't I right Akak?

Fri, 02/17/2012 - 23:46 | 2172290 DoChenRollingBearing
DoChenRollingBearing's picture

I thought it would be down to $5.00 or so, you know, the cost of getting it out of the ground.

Did Johnny Bravo ever finish college?

Fri, 02/17/2012 - 17:29 | 2171448 Piranhanoia
Piranhanoia's picture

stop calling me Shirley,  and we're on instruments

Fri, 02/17/2012 - 18:58 | 2171730 GernB
GernB's picture

Of course I'm serious... and stop calling me Shirley

Fri, 02/17/2012 - 19:05 | 2171745 spinone
spinone's picture

I picked the wrong day to stop sniffin glue

Fri, 02/17/2012 - 19:07 | 2171756 peekcrackers
peekcrackers's picture

I am serious and dont call me shirley !

Fri, 02/17/2012 - 20:54 | 2171974 iamgogi
iamgogi's picture

Yes, I am serious. and don't call me shirley. John P would be good. or Mabel

Fri, 02/17/2012 - 23:42 | 2172283 francis_sawyer
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I haven't felt this sick since the Anita Bryant concert...

Sat, 02/18/2012 - 03:43 | 2172505 Salamanda
Salamanda's picture

Oh yes he is... and stop calling him Shirley!

Fri, 02/17/2012 - 23:25 | 2172246 StychoKiller
StychoKiller's picture

Even a blind sow can find an acorn once in awhile.

Sat, 02/18/2012 - 17:13 | 2173586 FuentesElla23
FuentesElla23's picture

a best friend's mother-in-law makes $73 hourly on the computer. She has been laid off for 6 months but last month her income was $14399 just working on the computer for a few hours. Go to this web site and read more .... LazyCash9.com

Fri, 02/17/2012 - 18:11 | 2171595 Montecarlo
Montecarlo's picture

Gold is the new appl   2's and 20 baby!

Fri, 02/17/2012 - 16:54 | 2171272 SheepDog-One
SheepDog-One's picture

ARRRGghhhhhh me gold dubloons just got a curse from Davey Jones hisself!

Fri, 02/17/2012 - 17:40 | 2171498 Flakmeister
Flakmeister's picture

Not the Hedges very own Davey Jones!   Say it ain't so!

Fri, 02/17/2012 - 16:55 | 2171279 slow_roast
slow_roast's picture


Fri, 02/17/2012 - 16:56 | 2171281 fightthepower
fightthepower's picture

Soros is selling his gold!

Fri, 02/17/2012 - 17:04 | 2171332 hack3434
hack3434's picture

I thought he sold it last year...

Fri, 02/17/2012 - 17:18 | 2171396 francis_sawyer
francis_sawyer's picture

to his left hand

Fri, 02/17/2012 - 18:43 | 2171686 Chaffinch
Chaffinch's picture

It was an arm's length transaction

Fri, 02/17/2012 - 16:56 | 2171282 Robslob
Robslob's picture


Fri, 02/17/2012 - 16:56 | 2171283 SILVERGEDDON

Short gold, go long dong silver.

Fri, 02/17/2012 - 20:35 | 2171941 longdong silver
longdong silver's picture

get up and go, got up and went.....

Fri, 02/17/2012 - 16:56 | 2171286 PontifexMaximus
PontifexMaximus's picture

No one even dares to believe that he could be on the right track.....after knowing his short term track record. But: could he be correct?

Fri, 02/17/2012 - 17:20 | 2171409 francis_sawyer
francis_sawyer's picture

Someone needs to pass the memo to Paulson that gold isn't "backed" by anything...

Fri, 02/17/2012 - 16:57 | 2171287 alien-IQ
alien-IQ's picture

that's the signal to go long USD.Yes I know it's shit, but it's (for now at least) the best horse in the glue factory.

Fri, 02/17/2012 - 17:08 | 2171355 Alea Iactaest
Alea Iactaest's picture

... the tallest midget

Fri, 02/17/2012 - 18:39 | 2171679 HoofHearted
HoofHearted's picture

"the leper with the most fingers..." (thanks Max Keiser)

or...the floater as everything else goes down the toilet first...

Fri, 02/17/2012 - 22:43 | 2172177 A Nanny Moose
A Nanny Moose's picture

The hooker with crabs, rather than AIDS.

Fri, 02/17/2012 - 16:57 | 2171288 pan
pan's picture


Fri, 02/17/2012 - 16:58 | 2171289 mc_LDN
mc_LDN's picture

UGHHHHH. Unless.... He's realised that everyone on ZH does the oppopsite of what he says hence time to reverse trading strategy. BUY BUY BUY

Fri, 02/17/2012 - 20:40 | 2171951 donsluck
donsluck's picture

Hmm, is it time to abandon ZH? You know it couldn't last.

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