Thursday, October 29, 2009

Paul Tudor Jones 3rd Quarter Investor Letter: Another Gold (GLD) Bug

Einhorn, Paulson... and now one of the legends of the hedge fund business Paul Tudor Jones... have all jumped on the gold bandwagon.  [May 16, 2009: John Paulson Continues to Pile Into Gold] [Mar 17, 2009: John Paulson Joins David Einhorn as Gold Bug with Stake in AngloGold Ashanti (AU)]  While perhaps a "crowded trade" watching all these great minds agree on this topic simply reinforces my thesis.... this rogue central bank will keep printing US dollars until the cows come home. (and once the cows are in the barn, they'll keep printing just to make sure).  And they are not the only one... it is a race to the bottom.  [Oct 13, 2009: UK Sterling Following US Dollar into Abyss]

Three of the world's largest economies  including the largest 2 know only 1 solution to their problems - paper printing prosperity. [May 19, 2009: Paper Printing Prosperity Defined]  As we've seen from Japan, this is an stupid excellent plan! [Sep 18, 2009: US Dollar Replaces Japanese Yen as "Carry Trade" Currency]

Well as speculators we can be happy ... all assets must go up as more fiat money is thrown in from every direction.  (just keep educating yourself on "nominal" v "real" gains as we slather ourselves in gains from our Etrade accounts)  If you are a consumer, or live in the bottom half of America where you have to contend with the prices that are manipulated ever upward... I'm sorry, the most regressive tax on Earth is a small price to pay to make sure the upper 0.2% have their cake.  Remember this is not some "backwards" country like India where the central banker actually has concerns about the bottom half. 
  • India’s central bank Governor Duvvuri Subbarao described inflation as a “regressive tax,” justifying his steps yesterday to start withdrawing the monetary stimulus as price pressures build. “As far as public policy is concerned, it has a commitment to insulate the poor from inflation - it’s the prime consideration for the Reserve Bank of India and the government.” 
Thankfully we're a progressive 1st world country who knows where to butter our bread... forget the peasants, make sure those with assets are fat and happy.   Our central banker has that mission in mind, and is working day and night to serve his constituents.(which are the banks, you know that right?)

Remember...inflation is good - deflation is bad... why?  Don't ask... just listen to the dogma. [Aug 18, 2009: Bloomberg Opinion - Deflation Theory is Lemon We've Been Sold]


As always, click full screen for an easier read - Jones' gold discussion starts in earnest on page 14.

Tudor Third-Quarter Letter                                                                                                                                                

Hat tip to ExpectedReturns & Dealbook.

[Sep 1, 2009: Paul Tudor Jones, Clarium Capital not Buying Green Shoot Theory]

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