Suddenly the gold bugs are silent. The dollar bears, too. Remember, they all told us that massive central bank "money printing" was going to cause gold to go to $5,000 even $10,000 and ounce. That there would be inflation...even hyperinflation?
So what happened? Gold looks like death. Piece of shit.
And the dollar? Oh yeah, multi-year highs against just about every currency.
There is one thing that does concern me, however, and that is, when you start seeing pictures and commentary like this one (gold, death, etc) it might be time for a bounce. But other than a bounce, gold is crap.
15 comments:
I am here!
http://howfiatdies.blogspot.com/2014/08/positive-feedback-theory-of.html
Active here recently:
http://mikenormaneconomics.blogspot.com/2014/09/vincent-cate-cmmt-cates-modern-monetary.html?showComment=1412183233170
And today over on Bloomberg:
http://www.bloomberg.com/news/2014-10-02/fed-critics-say-10-letter-warning-inflation-still-right.html
Note also that Kyle Bass, Schiff, and I all are betting that the Yen will go down and the last 2 months have done very well.
I don't think betting on the Yen going down is a "great" call, its simply taking the JCB at its word, that it will try to lower the Yen.
Its all a matter of degree. You are really betting on a crash of the Yen
And today over on Bloomberg:
http://www.bloomberg.com/news/2014-10-02/fed-critics-say-10-letter-warning-inflation-still-right.html
Fed Critics Say ’10 Letter Warning Inflation Still Right
Look at who signed it. Ha ha ha.
"I don't think betting on the Yen going down is a "great" call, its simply taking the JCB at its word, that it will try to lower the Yen."
Eventually everyone will realize it is obvious the Yen should go much lower. Along the way we make money. With leverage it can make great money. It does not really matter if you think it is a great call or not, as long as my brokerage account goes way up. :-)
Greg, Japan is "just doing QE". If it is obvious that will lower the value of the Yen, does the same work for US doing QE? Is it obvious that the dollar will go down eventually?
Eventually everyone will realize it is obvious the Yen should go much lower. Along the way we make money. With leverage it can make great money. It does not really matter if you think it is a great call or not, as long as my brokerage account goes way up.
There's a difference between being right based on returns and being right based on causal analysis. One of the result of luck and the other is the result of getting the causality right.
That is difficult to prove in any area of complexity like econ. So people that are eventually "right" after having made many wrong calls previously, or having been way off in the timing, exposing capital unnecessarily and missing other opportunities claim that they were "right all along" when things go there way. That's a bogus argument.
If this were obvious, it would be simple to make money consistently in markets based on correct analysis.
In fact, people that understand causal analysis in terms of a particular theory may still be on different sides of a trade owing to, e.g., timing, or looking at what other traders are likely to do and trading technically rather than relying chiefly on fundamentals.
For example, one could have correctly analyzed QE as meaningless in terms of increasing demand hence wage and price inflation based on POMO being an asset swap and missed the run-up in equities based on false expectations and low margin cost, by assuming that the effect on equities would only be marginal.
But it was not the asset swap that resulted in the rise of equities due to "more money." It was a portfolio shift into riskier assets in search of higher return and lower margin cost enabling greater leverage. It was also driven by corporate profits rising from shrinking the wage bill and stock buybacks rather than increased sales or increased capex. So the expansion of capitalizations has been based on nothing that is substantial, hence, is unsustainable. So now there is a growing perception is that the market is Wiley Coyote treading air.
On the other hand, these same people would not have fallen for the analysis that found lots of inflationistas operating on another theoretical analysis shorting Treasury bonds in the face of a bull market in bonds.
Mike, as always uda man!
I still think, although I have no empirical data to support my position, that those that have access to the bully pulpit and drive the herd effect, have more impact than pure fundamentals?
As they say, Bill Gross was always talking his book.
With leverage you can make great money, and you can lose it too.
You guys are posers, anyone who follows your advice has been losing money since forever and underperforming with your calls.
What's worse is that this kind of crap goes everywhere in the financial sector, 90% of that people should be doing something else with their lives, 'investors' and 'managers' who manage to lose money 90% of the time.
If you are making 100 to 1 bets, it is ok to be wrong 90% of the time.
"As they say, Bill Gross was always talking his book."
If you are wrong there is usually someone on the Internet somewhere that can explain how you are wrong. If you can figure out you are wrong early, you don't need to lose as much money. So the trick is to search the whole Internet for someone who can clearly explain how you are wrong. :-)
Just to be clear, there really are bets that will pay off 100 times if Japan has hyperinflation in the next year. By my estimate, the odds are much higher than 1 in 100 that Japan gets hyperinflation in the next year. Also, even if it does not get hyperinflation but the Yen goes down I can still do well. But I could be wrong in 2013, 2014, 2015, and then right 2016 and still do very well.
Keynes said that not one person in a Million understood inflation, back in his day. Now days hyperinflation may be like that. Very few people really get it. So the market estimate of the risk of hyperinflation is way too low, if I am right. :-)
"If this were obvious, it would be simple to make money consistently in markets based on correct analysis."
I really mean afterwards, in hind-sight, it will seem obvious why the Yen went down.
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