Kyle Bass, addressing Chicago Booth’s Initiative on Global Markets last week, clarified his thesis on Japan in great detail, but it was the Q&A that has roused great concern. “The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time… and it is happening in size.” As he explains, the regulatory capital hit for the bank is zero (hence as great a return on capital as one can imagine) and “if the bell tolls at the end of the year, the 27-year-old kid gets a bonus… and if he blows the bank to smithereens, ugh, he got a paycheck all year.” Critically, the bank that he bought the ‘cheap options’ from recently called to ask if he would close the position -”that happened to me before,” he warns, “in 2007 right before mortgages cracked.” His single best investment idea for the next ten years is, “Sell JPY, Buy Gold, and go to sleep,” as he warns of the current situation in markets, “we are right back there! The brevity of financial memory is about two years.” ...
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Scooped by Hal onto Gold and What Moves it. |
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With continued volatility in gold and silver, today Michael Pento has written exclusively for King World News and he is predicting a rally in gold next week. Here is Pento’s tremendous piece: “The recent spate of better data on initial jobless claims has caused bond yields to rise, stock prices to rally, and gold shares to tumble in the last few days. For the sixth time since 2010, an oasis of improving economic data (that has proven to be ephemeral each time in the past) is once again giving investors the false signal of a robust and sustainable recovery. “This has, in turn, caused investors to once again wonder when the Fed would finally stop buying assets from banks and raise interest rates, which have been at zero percent for over four years. But the data on initial claims has been distorted by seasonal adjustments at the Labor Department.
"On an adjusted basis, initial jobless claims for the week ending January 19th dropped to 335k, which was the lowest level since January 2008. ..."
Hal's insight:
Wondering what's happening to gold right now? Check out the full post. There's certainly a ring of truth to Pento's analysis. I think some of the other things affecting the spot are the moves of govs like India and Vietnam who are attempting to manipulate the way their citizens hold the precious metal. Delete the scoop?
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