Trade of the Century?

via The Big Picture, Paul Brodsky & Lee Quaintance of QB Partners on gold.

As the SGP implies, an ounce of gold would fetch almost $6,000 if we lived in a world characterized by disciplined money issuance. In effect, people and governments around the world would have been exchanging their Federal Reserve Notes for gold to the point that it would take 6000 bills to buy an ounce. The Shadow Gold Price solves for the price of an ounce of gold if the US dollar were still pegged to gold and its rise reflects the inflation of the Monetary Base. (Gold used to actually be the US Monetary Base prior to 1971, when the US and other governments abandoned the Bretton Woods Agreement that imposed monetary discipline on their money printing.)


Obviously this appears to be a crazy gold price within the context of the $900-plus price at which gold has been trading recently on global exchanges (though we do remember its rapid move from $35 to $880 the last time around). We are under no illusions that the price of Comex gold will rise to track what we see as its intrinsic value (not because it shouldn’t, but because we expect external market forces with great interests in protecting the sovereignty of fiat currencies to step in before that occurs, see “Potential Endgame – A Managed USD Devaluation” below).

5 Non-Traditional Inflation Indicators

Nice article from seeking alpha.

We essentially use five indicators:

1. Emerging market small caps vs. developed market small caps (EWX vs. GWX)
2. Commodities in general relative to gold (CRB vs. GLD)
3. Non US inflation protected Treasuries vs. ex US unprotected Treasuries (WIP vs. BWX)
4. Commodity stocks vs. the broad US stock market (CRX vs. VTI)
5. Commodities vs. US 30 year Treasuries (CRB vs. USB)

...To us the market is sending very strong signals that world growth and inflation is picking up. We are not above the market (and have seen very few cases of anyone who has consistently outperformed the market) that is why we follow it.

Two Short-Term Scenarios for Gold

Two Short-Term Scenarios for Gold. From Seeking Alpha

Given the certainty of enormous long-term gains in the precious metals sector, investors should maintain a long-term outlook. “Buy and hold” may be a dead strategy in many conventional sectors of the economy, but it is certainly a viable (and prudent) strategy for precious-metals holders – as well as in other strong, commodity-plays.

Moonwalking with Faber

Comments from Marc Faber at the AsianInvestor Investment Forum.

Marc Faber thinks there are opportunities in Asian healthcare, in banks in countries like Thailand (where the Lehman structured note salesmen found the people too unsophisticated to buy their product), tourism, and naturally gold. On the property side, he recommends avoiding condos in financial centres and buying farmland.

Commodities Outlook - Monetary Base Doubling Benefits Gold

Bloomberg interview with gold bull Peter Boockvar of Miller Tabak.

Marc Faber on Korea, Natural Gas, Hyperinflation

Interview with the Korea Times. He touches on the usual, however has some interesting thoughts on natural gas:

As for investors interested in commodities, the Swiss-born investment advisor said natural gas would be his best pick, adding crude oil prices will undergo corrections in the coming months. ``Natural gas is cheap, compared to crude oil. I would buy natural gas. Oil was traded as low as $32 per barrel late last year but has jumped to $72. From a pure demand and supply perspective, the demand from both advanced and emerging economies is not strong. But in the long-term, prices will be much higher than now,'' he said.

I'll go on record and say I wouldn't be buying natural gas (and certainly not UNG) until we get through September/October and see that containment isn't an issue.

Faber Banging the Drum again on Hyperinflation (and Gold , of Course)