fredag den 25. september 2009

The golden rule is that there are no golden rules. Bernard Shaw

Short blog today as I waste my time waiting for the mighty policy makers utter their final communique nonsense.

This morning we had a "heated" argument in the office, the resident GOLD BUG Carsten was soooooo keen for me to read part of speech given by the mighty hedge fund manager John Paulson on gold.

The sentence which was supposed to get me excited read: "...and he observed that if one thinks about gold in a three or five-year time horizon (instead of hour-to-hour/day-to-day/week-to-week), the probability increases of gold being higher over time (most likely, much higher)"

What total load of nonsense! The probability of gold going up in 1 min, 30 min, 1 hours, 1 day, 1 month or 1 year is EXACTLY the same - there is no carry rates in Gold so even the Hold-and-keep argument is nonsense, but as this was said by the billionaire Paulson it be must right ????

This type of argument typifies all of us - we are arguing circular : There are NO.. and I mean NO real new analysis coming to the market, so instead we rank the quotes from the investment gurus according to their latest position bias. Makes sense. If its higher buy more. End of argument.

I think it is time for people to find the annual survey from Barron's on mutual funds - the one that states: Always sell the best performing managers in a quarter and buy the bottom performing manager - It's a mean-reverting game when it comes to "guessing" correctly - Even futurist miss 99% of all their calls......

On the note of Gold I will issue STERN warning on potential for all of you/them being disappointed:

CHART 1: Gold daily (XAUUSD).. Trend line - 10 days exit comes in a 990.00 - so does old top from other words be forewarned - should gold close below 889.00 we could see some stops get started on the down-side. (Click on chart to enlarge)

Also, one of the top players in commodity trading: Larry Williams, whom I am lucky enough to share information with, he has a stern warning in his latest update video:


There is clearly a consensus in the world presently that 50% of the world's GDP is in an inflationary paradigm(US, UK, China and Japan), while other 50% of will use "deflation" as the path to normality. This being mainly ECB and Europe.

The argument makes sense: Europe has the worst demographics and needs to increase competitiveness this will happen in deflationary environment as low growth enforces lower salaries, redundant industries disappear.......

The problem though remains: Who will buy the worlds goods?

Last a link with my very own top ranked guru: Julian Robertson (listen please)

Safe trading,

Steen Jakobsen

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