Both Edelson and DiGerogia work for Weiss. Their views on Europe are polar opposite. There is no longer consensus on anything economic. Is gold up or down? Is the stock market up or down? Is the dollar up or down? This is one tough economic landscape to navigate. Everyone has tough choices to make and you will have to rely on your “gut” feeling. Mistakes will be made, and they will be big ones. Now is the time to think logically about the markets and decide what offers value. Do you buy stocks that have been rising for five years or do you buy gold that has been greatly oversold and plunging for two and a half years? Will Europe’s economy implode, as suggested by Edelson or will it recover as suggested by DiGeorgia? Will the dollar rise with Europe’s problems or will it fall in the economic crisis as envisioned by DiGeorgia? Russell thinks the bull market in stocks is getting long in the tooth and it is starting to worry him. Edelson is strong on the stock market. A weak stock market usually is good for gold since the money that exits will be looking for a new home and gold is a good alternative. But Edelson expects a strong rise in the stock market and at the same time, gold to move into a super-bullish cycle. Do you see what I mean? No easy choices, no consensus. You are on your own (as usual) and these are very difficult and I say dangerous times. Not a good time to make a major mistake. Personally, I like gold and silver, but I am very loyal to this industry and I still cannot imagine this will turn out bad, but I also have a few year timeframe in mind too. Which way things go in the next few weeks/months are anyone’s guess, but I do believe that Bernanke will keep the markets as calm and steady as possible until he leaves office at the end of the year. He surely would like to leave on a high note, not with the economy in distress and that suggests more QE and more “talk” about austerity, but no action. Whoever replaces Bernanke has one hell of a job on their hands.
John Paulson has dropped a bundle in his bullion-based hedge fund, but he is not throwing in the towel and takes the “sensible” long-term view, like we do. We think he is correct and admire his strength of conviction!
John Paulson, the billionaire hedge-fund manager seeking to rebound from losses tied to bullion, posted a 23 percent decline in his PFR Gold Fund last month, according to a letter to investors.
The drop brings losses in the strategy, formerly known as the Paulson Gold Fund, to 65 percent since the start of the year, the firm said in the July 3 letter, a copy of which was obtained by Bloomberg News. The fund, which consists mostly of Paulson’s own money, is the smallest strategy of the $19 billion money manager and the only one to post losses this year.
The firm reiterated its commitment to investing in bullion and stocks of gold producers for protection against currency debasement as central banks pump money into the global economy. Gold dropped 12 percent in June, the most since October 2008, after Federal Reserve Chairman Ben S. Bernanke said he might start reducing bond purchases that have fueled gains in financial markets globally.
“Although the timing is uncertain, if you have a long-term view we believe the funds offer the potential for outsized returns,” the firm wrote in the letter.
–Zero Hedge, July 8, 2013
And finally, a few words from Richard Russell – and we agree with every word that he writes:
Thanks to Benny and the Feds — you’ve inflated the price of everything, you’ve killed the common man’s savings via collapsing buying power, you’ve killed the Treasury market, you’ve created bubbles in various assets (art, cars, collectibles), and you’ve driven the dollar higher, hurting our exporters. Finally, in your frenzy to halt deflation, you’ve screwed up most of the markets with your QE, Twist and ZIRP. I hope you’ve saved enough in spare notes to buy the gas needed to fill up your jets.
–Dow Theory Letters, July 8, 2013