A Video for Fred/EJ....(Gold bugs do not watch!)

[Mega]

http://www.youtube.com/watch?v=PwarihQUnsk

Mike

[Guest]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Hugh Hendry is a very bright chap. I give him 100% for sussing out the next two year trend. This is what I've been reiterating. Gold, and all inflation hedges are WEAK for the next one year, and likely two years. In a world where -5% inflation eventuates, the EURO will crater due to it's large exposure to emeging markets (which plunge much more) and the USD handily wins the ugly contest. I've sold a large chunk of gold and silver in my EU based accts. and parked my money in the USD. Meantime, the YEN is apparently breaking down now against the USD also. If it does, and Euro worsens drastically as Hendry forecasts, what's left standing against the USD?

I don't wish to poke iTulip's stance in the eye. iTulip are the beacon for the "big picture" and I for one am immensely grateful to them for the priceless intelligence they have provided this past two years. But the imminent breakdown of the USD due to unsustainable internal and external debt is a creature that can behave in more than one single way. It seems to me it has two, or three, or more avenues to unfold, and one of those avenues is that a global disintegration such as Hugh Hendry points out, turns upside-down the two most popular consensus opinions in this community at present. That gold is fated to rise and the USD is fated to fall. Hendry is putting forward his view, that we likely are entering a longish period where it can very well be the reverse. Does anyone begin to get Hugh Hendry's viewpoint?

No-one is saying go and sell all your gold. If you've read iTulip enough you know what the macro trend is - inevitably. But the bullish chatter about gold is really a bit too generic. Notice what Hugh Hendry says about regarding gold as a "back up the truck now" investment. (he's taking the opposite viewpoint to those who subscribe to: COMEX will default, or XYZ will happen, etc. etc.). As he puts it, "People have rushed to read the last chapter of the book" and as he says, "you just can't do that". If you are in ex-USD currencies any downside in gold would be much more muted for you, and/or it may continue to do moderately well. But in USD it has a possibility of being more of a sagging investment than one might first conclude, for the next year to 18 months, to 2 years. Nothing's certain, but there is a possibility, if the reality of -5% inflation extending occurs. Hugh Hendry seems to think that possibility is good at this point.

It's understood though that iTulip's recommended allocation (as I understood it) of about 30% in the present environment is, "not intended as an investment, but as insurance". It is a very sensible allocation and it looks like iTulip "picked the right gear to climb the hill" eight or nine years ago and has ridden this far without changing gears much at all. One wonders whether they are even breaking a bit of a sweat yet. That is actually an exemplary sobriety in money management (not that I followed it, and that wound up to my detriment). When you can calibrate your defensive asset allocation "putt" from year 2000, and get a rough idea of where it's going to land in 2012 without so much as having to adjust your trajectury one bit, you are batting a pretty good average.

Anyway Hugh Hendry is an damn good analyst IMO. I really appreciate this hedge fund manager's acumen.

Meanwhile, here's iTulip, proceeding without so much as a change of altitude into this turbulence.

ITULIP__OVERFLIGHT.jpg

[Starving Steve]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

I think the best case for the US would be a slow grinding de-flation, just like in Japan.

I understand that housing prices are now back to 1975 levels in Japan. That scenario would be great for our children and grandchildren to buy homes.

I did not watch the video because my computer has a hard time with videos.

Another scenario for the US would be an Argentina or Mexico unfolding. That would mean inflation, complete collapse, and starvation for everyone except the gold bugs.

[Guest]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Try to download that video and watch it somewhere Steve. This guy is really good, and makes some wonderfully trenchant observations. His prediction that the EURO will crack wide open is bold and IMO spot on. Imagine what that eventuality would do to the USD on the international exchange rates.

Of course the USD is headed for an "unseemly event" - that's even an understatement, more like a speeding train due to hit a very firm wall. All that Hugh Hendry is commenting on is WHEN, and among other things he's pointing to the presumed "permanence" of the EURO through this interval and asking whether anyone has fully calibrated the likelihood of it pulling through. Close your eyes and imagine a EURO of the France, Benelux countries and Germany, and then imagine the USD.

... I did not watch the video because my computer has a hard time with videos. ... Another scenario for the US would be an Argentina or Mexico unfolding. That would mean inflation, complete collapse, and starvation for everyone except the gold bugs.

[Jim Nickerson]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

http://www.youtube.com/watch?v=PwarihQUnsk

Mike

Probably because the market did not go down more today, I am in a particularly foul mood--that may cast some light on what follows.

Despite what one may think of Hendry's comments in the video Mike posted, it is an excellent use of one's time assuming an interest in whatever Hendry might have to share. It is edited so that all the bullshit questions by the probably overpaid talking-heads are out of the video except for one small segment.

Compare that to this video interview http://www.cnbc.com/id/15840232?video=1027496846

of Roubini and Taleb from 2/9/09. It is the single worst debacle I have ever seen, or at least remember seeing. The three or four talking heads should have their tongues cut out then banished to living on the street.

Bottom line for me is the last video painfully reminds me why I do not watch business TV--fortunately neither video had the burdens of commercials.

[renewable]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Why is he holding UK gilts when GBP is, as he says, 'going down' and he is full of the praises of sterling devaluation? :confused:

[renewable]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

edit: double post

[metalman]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Nothing's certain, but there is a distinct possibility, if the reality of -5% inflation eventuates across the world. Hugh Hendry seems to think that possibility is the likeliest at this point.

He is an ace. I really appreciate this hedge fund manager's acumen.

does anyone else understand how completely idiotic that is? -5% deflation across the world? for years? how lame. has that ever occurred in history? no? gee, wonder why. :rolleyes:

[Mega]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Delighted i found something of intrest for you gents, no work in the workshop, or my mate next door, or his mate....or his mate.

You get the picture.

Love to know Fred or EJ or even Schiffs thoughts on this.
Mike

[Guest]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Miker - my last unsolicited remark on this. In the UK, if Hendry's correct and -5% inflation occurs for any length of time, my suspicion is that you'll A) probably see a very muted decline or softness in your gold investments, from the GBP zone (and ditto the EUROZONE and other ex-US currency zones), and B) iTulip's asset allocation of 30% into PM"s makes this entire story irrelevant for anyone worldwide, in whatever currency. With a sensible 30% allocation to PM's one would be foolish to sell even one ounce going through this period. I only was selling because I was way over-allocated. My feeling is that every ounce of that 30% can and should be held onto firmly. I think iTulip are and continue to be spot on with this allocation. I envy you living in the GBP zone because they've just thrown you an easy softball on this question. Plus you've got such a wonderful climate compared to San Diego, with your seasons and whatnot in Liverpool? For USD owners the ride may be a little bumpier. But so what? If we are riding in the same gear as iTulip we'll just cycle right through this with a yawn. USD may provide a nice extra ballast for those that have most of their treasuries exposure in other currencies. If Hugh Hendry suggests gold will be weaker than supposed, it's natural to conclude the USD may be somewhat firmer (but you have to be a little "currency agnostic").

Delighted i found something of intrest for you gents, no work in the workshop, or my mate next door, or his mate....or his mate.

You get the picture.

Love to know Fred or EJ or even Schiffs thoughts on this.
Mike

[Starving Steve]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

I can't get the video to play, but to comment on the notion of -5%/year inflation, that would be what I would imagine hyper-deflation to be.

A slow grinding de-flation might be more along the line of -0.5%/year, not -5.0%/year. A hyper-deflation like this would be more along the line of the train-wreck we are seeing now and maybe even worse.... Eeeeh gad! :eek:

[kartius919]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

What data set is he looking at that shows any signs of a -5%.

Also I don't know if short term yields are indicative of only inflationary expectations, even short term inflationary expectations. Part of it is ZIRP. Another part reflects the fear in the money market and banking sector. Corporations do not have many places to park their cash because the bank could go belly up and money markets can be frozen. At least with a short term treasury, the gov't guarantees you your money and the market is fairly liquid still. If they go belly up too, then your dollar would be worthless anyway. The two year will go no where near -5% and I would bet a quadrillion dollars on that.

I'm also sick of these financial "whiz kids" and Austrians bashing employee pensions and benefits as "legacy costs." For christ sakes, the American union was what made America great. They gave you your ******* WEEKEND. They gave you ******* public education. They gave you your ******* health benefits. It pushed up wages and living standards. It dragged the profits away from corporations and back into American pockets so they can spend. THE PROBLEM IS THESE FINANCIAL ASSHOLES. All they can think about is cutting costs and shipping jobs overseas to maximize profits. This short sighted BS results in a working class unable to purchase the goods that are produced, leading to oversupply and the stupid ******* austrian "business cycle." FREE MARKET IS ******* KILLING THIS COUNTRY. Thus we end up with either wages like the Chinese or death.

[metalman]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

I can't get the video to play, but to comment on the notion of -5%/year inflation, that would be what I would imagine hyper-deflation to be.

A slow grinding de-flation might be more along the line of -0.5%/year, not -5.0%/year. A hyper-deflation like this would be more along the line of the train-wreck we are seeing now and maybe even worse.... Eeeeh gad! :eek:

1. gov't can always create inflation... itulip 101... The truth about deflation

2. the usa gov't ain't gonna sit around in a 5% deflation global cess pool like 1930 - 1934 when it doesn't have to... no gold standard. fact is... the longer -5% goes on, the faster the gdp crash, the higher the unemployment, the more imminent the inflation.

anyone who does not get this is a fool. the only question for intelligent people to ask is... how they are going to do it? and for a smart person... when!?

this guy is stuck in the dark ages of the inflation/deflation debate... 'can they create inflation? will they if they can?' and blab, blah, blah.

try this line of questioning...

why the hell is gold over $900 & silver over $14 during a supposed 'deflation'? the money supply time lag story is starting to get crusty.

why the hell isn't oil $10 during this 'deflation' like it was when inflation was low and oil demand was high in 1999 instead of $40? oil demand is plunging! wtf?

c'mon... thinking caps, folks.

and... the tour de force question is...

what is the value of the denominator of the deflating debt if not for the productivity, hard work, reputation, taxes, credit & fine gun ships, of the usa?

why it's... it's... zero!

what's a $5,000,000,000 debt owed by gm or citi to the usa gov't divided by zero?

zero!

what's a $2,500,000,000,000 in credit card debt owed by all the usa j6p's divided by zero?

zero!

trick question for the lukinator...

what's a $13,000,000,000,000 debt owed by the usa to china divided by zero?

i could do this all night.

bottom line, luke... what's your bet... that the debt denominator goes from 1 toward 2 or 1 toward 0... knowing full well which one means instant death for pols and the other means maybe getting re-elected.

[Guest]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

Metalman - you are looking maybe in the wrong direction. Hugh Hendry was making observations about the negative or positive GDP in other parts of the world, like, Europe, or Asia? You are invoking how the US govt can "create positive inflation" as though this were automatically globalized, but that's reminiscent of how American Football is called the "world series" - when in fact it really isn't. If we are to be frank, the prognosis remains uncertain when it comes to USD capacity to re-inflate them all. Treasury will likely have it's task cut out for it just to turn this corner in the US. You are ascribing to the US govt the capacity to "create positive inflation" not just in the US, but worldwide, as soon as it "really gets serious about it". Very likely they even could - eventually. And the "eventually" is what Hendry is attempting to point out is not only plausible, but requires scrutiny. I would also hesitate to call Hugh Hendry a fool, as he's showing evidence of watching unfolding events with a keen eye.

[thousandmilemargin]

Re: A Video for Fred/EJ....(Gold bugs do not watch!)

If you watch some other Hugh hendry videos you will find that he states his intention to move out of government bonds and in to gold at the right time. He is expecting a period of deflation, then inflation. He talks about gold going above $3000. But he expects the US dollar, and government bonds of various types, to be strong for 1-2 years before inflation kicks in.

His postion isn't that far from EJ. The difference is that EJ expects a fairly short period of deflation before the inflation kicks in. Hugh expects around 18 months worth of deflation before inflation gets traction.

Watch his other videos and you'll see he believes in gold - just not yet. He is wary of gold in the short term. In fact, if you watch the video again knowing this, you'll see he says that. Hence the reference to St Augustine 'Lord, make me virtuous - just not yet!"

Also, he isn't being dogmatic in this video. He is stating scenarios, he is covering his bets.

Personally, based on what EJ says and what Hugh says, I expect deflationary forces to continue into mid 2010, with further severe declines in housing and stock markets, before Fed actions gain traction and we move to an unambiguously inflationary period, with rising comodity prices etc. It is very hard to say when the US dollar strength will end - 6 months, 12 months? I'm coming to the view that all currencies may go down together, which might mean the US dollar does not move much against the Euro, just against gold etc.

I think Hugh is right to say that a lot of people are buying gold early in anticipation of inflation that is still a year or two away. But people with gold are likely to hold onto it as they see inflation coming, rather than trying to trade short term. So gold may hold steady through 2009 - as it did in 2008 - then take off in 2010 once it becomes clear that inflation is very close.