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

[Guest]

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

A very fair summary and appraisal, IMO. Smart, nuanced analyst.

If you watch ... other Hugh hendry videos ... he states his intention to move out of government bonds and in to gold at the right time ... His postion isn't that far from EJ. ... The difference is ... Hugh expects around 18 months worth of deflation before inflation gets traction. ... he believes in gold - just not yet ... he isn't being dogmatic in this video ... Hugh is right to say ... lot of people are buying gold early ... inflation that is still a year or two away.

[metalman]

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.

that's all well and good but itulip said deflation then inflation since 2001 when it did you good. is he saying gold will go down to $270 so you can pick it up at the prices itulip recommended? what's his deflation low point? maybe down to $700? $800? a bit late to the party, eh? at this point it's noise. the 'deflation' is over. by the time this inflation shows up, it will be like no other.

[BadJuju]

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

at this point it's noise. the 'deflation' is over. by the time this inflation shows up, it will be like no other.

When do you think it will show up, good sir?

[metalman]

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

When do you think it will show up, good sir?

said smart people know that... do not confuse me with those, young man!

[BadJuju]

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

said smart people know that... do not confuse me with those, young man!

I try not to! :p

[Starving Steve]

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

Somewhere, I just saw the figure that about 30% of the world's wealth has been destroyed already by this Depression. So, the world's central banks can do a lot of M1 inflation, and the net result could be worldwide DE-flation still.

Scary! They all have to get their print-job just right, not too much and not too little..... This reminds me of controlling a car in a skid on an icy road; you had better correct the skid just right lest you end-up in a head-on collision or in the ditch.

[GRG55]

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

Somewhere, I just saw the figure that about 30% of the world's wealth has been destroyed already by this Depression. So, the world's central banks can do a lot of M1 inflation, and the net result could be worldwide DE-flation still.

Scary! They all have to get their print-job just right, not too much and not too little..... This reminds me of controlling a car in a skid on an icy road; you had better correct the skid just right lest you end-up in a head-on collision or in the ditch.

Steve: Let's remember that a lot of that "wealth" wasn't real. Leverage made that "wealth", and lack of leverage is destroying it. With banks and hedge funds levered 30, 40, 50 to one how much "money" was really invested for each dollar of "wealth".

To believe in deflation means having confidence in the issued currency and its long term purchasing power. At the moment many people are enamoured of the public sector and its ability to "manage' our way out of this mess. How else to explain the demand for Treasuries. But is that confidence durable? You seem to imply that it will endure for quite some time. Others are sceptical. You pays your money and you places your bets...

[GRG55]

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

A very fair summary and appraisal, IMO. Smart, nuanced analyst.

Lukester: Why is the iTulip thesis restated by someone else, "smart, nuanced...", and when stated by iTulip it's flying into turbulence at the wrong altitude?

that's all well and good but itulip said deflation then inflation since 2001 when it did you good. is he saying gold will go down to $270 so you can pick it up at the prices itulip recommended? what's his deflation low point? maybe down to $700? $800? a bit late to the party, eh? at this point it's noise. the 'deflation' is over. by the time this inflation shows up, it will be like no other.

Not so. I've followed Hendry for quite a few years from his days at Odey [he is a controversial hedge fund manager and consequently very well known in Europe]. He has repeatedly made it clear that, as a hedge fund manager, he is NOT an investor, but a speculator - he has no time for hedge fund managers that try to peddle themselves as anything else. And he played the gold moves during this decade very astutely, and got the meat of the uranium, base metal and ag commodity runs as well. People listening to him need to be aware that he looks for the assets that "have not participated" but he will [and has] changed his investment position very rapidly on occasions when circumstances warrant. One of my favourite phrases from Hendry is that he likes to find investment ideas by "stirring around the ashes"...

[audrey_girl]

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

thanks Mike - very interesting thread, thanks Metalman and others interesting discussion....

I think the key to what he was saying is that like the 70s, gold could take a great swoon b4 it takes off and he is guessing that swoon could last a couple of years.

historically he is correct, gold did have a major correction b4 climbing to all time new highs in the late 70s.

maybe history will repeat itself....

anyway, no one said this will be easy - if it was everyone would be rich - i guess the best strategy is to stay diversified

[qwerty]

Euro breakup- bullish or bearish

First of all, one oratorical point Hendry made stuck with me: "People have gone right to the last page, instead of reading the whole book." By which I took it he meant, yes, on the last page inflation and gold go through the roof, but he's looking at how the plot unfolds.

Second, does anyone have a link to an analysis of what would happen to the Euro if, say Ireland, left it? The mechanics, the liquidity issues, etc.

Hendry suggests that the Euro-zone will break up and end up restricted to the strong, core EU countries (D, F, NL). Would that be bullish or bearish for the Euro as a currency?

The fact that the Euro is abandoned by the weaker countries is seen as the "demise" of the Euro, but that's a "demise" in terms of it's coverage - would it be a demise in terms of its value?

It wouldn't look great as a reserve currency, but as a Franco-German local currency, perhaps it would have some fundamental appeal?

[Guest]

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

You actually mis-read my comments GRG. Read it again and you'll see what I was saying. I pointed out precisely, that iTulip has indeed flown at the RIGHT altitude for the past 8-9 years, by selecting an allocation of 20%-30% in PM's, and maintaining a steep position precisely in USD, they have straddled to the two main components of what's working itself out.

They have set their flight-trim so well that even transitioning from the rampant inflation of the past four years into a very large international deflationary interlude such as Hendry describes, they don't still don't need to change their stance ("altitude") at all.

You maybe looked at a picture of a balloon flying close to the ground and thought I was implying they were at the wrong "altitude" because it looks low. Actually not - the low altitude of the balloon is a synonym for not employing too much gold leverage to inflation. They figured a flight trim back in 2000 which is still valid today.

Lukester: Why is the iTulip thesis restated by someone else, "smart, nuanced...", and when stated by iTulip it's flying into turbulence at the wrong altitude?...

[thousandmilemargin]

Re: Euro breakup- bullish or bearish

Second, does anyone have a link to an analysis of what would happen to the Euro if, say Ireland, left it? The mechanics, the liquidity issues, etc.

Hendry suggests that the Euro-zone will break up and end up restricted to the strong, core EU countries (D, F, NL). Would that be bullish or bearish for the Euro as a currency?

The fact that the Euro is abandoned by the weaker countries is seen as the "demise" of the Euro, but that's a "demise" in terms of it's coverage - would it be a demise in terms of its value?

It wouldn't look great as a reserve currency, but as a Franco-German local currency, perhaps it would have some fundamental appeal?

Good points. I've started a new thread "Will the Euro fall against the Deutschmark?" which links to an article that addresses this issue

[Guest]

Re: Euro breakup- bullish or bearish

Good point Qwerty. With the EURO reemerging as a reduced zone currency it actually would have the potential to be very strong eventually. But initially the disintegration of the current EURO zone would be traumatic, and could easily cause it to effectively retire as the alternate reserve currency to the USD for a couple of years, which is a very short time. All we have to look at is the probability that the EURO really could fracture out of it's current configuration.

If this occurs, it is quite obviously wildly dollar bullish for the short term. A sobering thought for all of us who know the USD is if anything even worse crap.

Also if the PIIGS secede or fracture out of the monetary union, what happens to the prospective future monetary union of all of the EU's newer arrivals to the east? The collective effect of any fracture in the current EURO configuration is potentially a tidal wave change in the currencies for an interim period. Potential fracture of the EURO is a really big deal at the psychological level, affecting the USD disintegration timeline. Obviously.

First of all, one oratorical point Hendry made stuck with me: "People have gone right to the last page, instead of reading the whole book." By which I took it he meant, yes, on the last page inflation and gold go through the roof, but he's looking at how the plot unfolds.

Second, does anyone have a link to an analysis of what would happen to the Euro if, say Ireland, left it? The mechanics, the liquidity issues, etc.

Hendry suggests that the Euro-zone will break up and end up restricted to the strong, core EU countries (D, F, NL). Would that be bullish or bearish for the Euro as a currency?

The fact that the Euro is abandoned by the weaker countries is seen as the "demise" of the Euro, but that's a "demise" in terms of it's coverage - would it be a demise in terms of its value?

It wouldn't look great as a reserve currency, but as a Franco-German local currency, perhaps it would have some fundamental appeal?

[Guest]

Re: Euro breakup- bullish or bearish

What Deutschmark?

Good points. I've started a new thread "Will the Euro fall against the Deutschmark?" which links to an article that addresses this issue

[Basil]

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

Anyone notice that the video is from December, and he says he was short gold miners and had no PMs? Well gold has gone up significantly since then, as have gold mining shares. So I am curious to know what he now says.

I am of the position that PMs get whacked for another month or two, but surge sooner than two years out. However, given the current instability in most economies, gold could surge quite quickly.

That being said, Hendry is one of the few analysts I take seriously. He has made some brilliant calls.