The chart above shows an index of gold and silver miners relative to the S&P 500, breaking now to a new extreme. Will the world need to produce and find more minerals and metals or will the world just need health care and bio-tech?
The read line is the co-basis that is rising as the dollar rises relative to gold. This indicates rising demand for physical and more futures selling. Bullish.
So who is selling?
The Fed’s decision to restock the rate toolkit has got the gold market very nervous,” George Zivic, a New York-based portfolio manager at OppenheimerFunds Inc., which oversees $235 billion, said by phone. “We have already seen that gold did not perform as a safe-haven investment. There is not a single motivating reason to own gold.”
Who knows, perhaps money managers are funding their long equity positions with short gold positions.
“It looks like the end of an era for gold,” said Howie Lee, analyst at Phillip Securities in Singapore, adding that China had been grappling with oversupply after importing a record volume in 2013.
Money managers (a few of them) finally see gold as undervalued.
I am posting this so as to have a record of certain market events. I seek out where the most marginal or urgent seller is operating AFTER a long decline (four years).
Here is the Perhsing Square website on Herbalife. Sign up and learn:
Pershing has their HLF deck up on the website: http://factsaboutherbalife.com/
Verdict: This will get ugly but my money would be on Ackman since there is no competitive advantage, so I would place the value no more than tangible book value at best with no more than a 90 second look at the financials.
The purpose of this post is also to study a Ponzi scheme. The response of the company to Ackman’s research leads me to say this company’s days are numbered.
BOOM and BUST
Could Austrian Business Cycle Theory Dotcom Boom and Bust have helped you as an investor? Buffett’s presentation on the Dotcom Bubble in early 1999 (See page 64) A Study of Market History through Graham Babson Buffett and Others. Note how the market went into a speculative frenzy, rising more than 50% AFTER Buffett’s speech. Human action can’t be predicted like a physics experiment.
An excellent book that predicted the bust was the The Internet Bubble: Inside the overvalue World of High Tech Stocks–and What you Need to Know To Avoid The Coming Shakeout by Anthony Perkins and Michael Perkins (1999 and 2001 editions).
Burning up (cash) http://www.fool.com/news/foth/2002/foth020830.htm
A student’s overview: David Carr – THE TECHNOLOGY STOCK BUBBLE
Ackan presents on Herbalife: http://www.reuters.com/article/2012/12/20/us-ackman-herbalife-idUSBRE8BI1MZ20121220. He says that he will be setting up a website with all his research on Herbalife. If anyone FINDS IT, please send me the link to post. This could become a good case study on multi-level marketing.
Dec. 21 2012 Update: Thanks to a reader: www.businessinsider.com/bill-ackmans-herbalife-presentation-2012-12
See presentation here:Who-wants-to-be-a-Millionaire
See this article:http://seekingalpha.com/article/918831-an-investor-s-guide-to-identifying-pyramid-schemes
Motivate thyself: Anthony Robbins http://www.youtube.com/watch?v=Cpc-t-Uwv1I&feature=share&list=PL70DEC2B0568B5469. Yes, he could be a huckster, but he is a great public speaker. Focus on HOW he presents.