Investment Guru Of The Year

Investment guru of the year, Whitney Tilson:

http://www.tilsonfunds.com/bio_w.html

"Mr. Tilson co-authored the book, More Mortgage Meltdown: 6 Ways to Profit in These Bad Times (published in May 2009), has written for Forbes, the Financial Times, Kiplinger's, the Motley Fool and TheStreet.com, was one of the authors of Poor Charlie's Almanack, the definitive book on Berkshire Hathaway Vice Chairman Charlie Munger. He is a CNBC Contributor, was featured in a 60 Minutes segment in December 2008 about the housing crisis that won an Emmy, was one of five investors included in SmartMoney's 2006 Power 30, was named by Institutional Investor in 2007 as one of 20 Rising Stars, has appeared dozens times on CNBC, Bloomberg TV and Fox Business Network, was on the cover of the July 2007 Kiplinger's, has been profiled by the Wall Street Journal and the Washington Post, and has spoken widely on value investing and behavioral finance. He served for two years on the Board of Directors of Cutter & Buck, which designs and markets upscale sportswear, until the company was sold in early 2007."

Too bad Mr. Tilson is getting his ass kicked, down 24.5% YTD even after a good October....http://www.equityhelpdesk.com/finance-news/another-tough-month-tilson-cnbcs-favorite-buffett-worshipper-down-over-24-ytd

Our fund rose 7.0% in October vs. 10.9% for the S&P 500, 9.7% for the Dow and 11.2% for the Nasdaq.  Year to date, it’s down 24.5% vs. +1.3% for the S&P 500, 5.5% for the Dow and 1.9% for the Nasdaq.

That's even worse than Warren Buffet, who's flagship Berkshire-Hathaway fund is down 6% YTD:


http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=BRK.A&x=44&y=17&time=19&startdate=1%2F4%2F1999&enddate=11%2F18%2F2011&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=9&uf=0&lf=268435456&lf2=4&lf3=2&type=4&style=320&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11

So if you follow or invest with genius book, magazine, and CNBC commentators like Mr. Tilson, you too could be getting your ass kicked.  Or, you could have just followed the trend and bought gold, which even with a $45 sell off yesterday is still up 22% YTD.  But of course, everybody knows gold is in a bubble.  Pay no attention to who is making money and who isn't.  What the hell do I know, I've never been on CNBC as an expert.

YTD Scoreboard:

Whitney Tilson   -24.5%
Warren Buffet       -6%
S&P 500              1.3%
DOW                    5.5%
Nasdaq                1.9%
Gold                     22%    

To be fair, Mr. Tilson's hedge fund is up 215% over the last 11 years.  Too bad the shiny metal is up 600%, not even close.  (My first gold purchase 5 years ago at $565/ounce has more than tripled).  Isn't it funny how the people who were right and continue to be right in their investing, like Ron Paul, and Peter Schiff, are continually derided in the media?  My friend Kevin was loading the wagon when gold was at the bottom, as was Ron Paul and Peter Schiff.  I still challenge anybody to find any investor on the planet who has outperformed Ron Paul's portfolio over the last decade.  There are others like Adam Hamilton who called the gold bear bottom within about a month of it happening, yet remain virtually anonymous.  When was the last time you saw any of these people on CNBC?  Hmmm....I wonder why?  Why wouldn't they put on the winners?  I will leave that for you to decide.

BTW, none of the people I have mentioned who have bought gold and silver are selling.  We continue to buy from the few nattering nabobs of negativity who are going through their dressers and scrapping what little they can find.  The run up in price over the last decade has happened with virtually no interest from the public, who remain on the sidelines.  And what are the banksters doing about it?

http://online.wsj.com/article/SB10001424052970203611404577043652396383484.html

LONDON—Total central-bank gold purchases in the third quarter more than doubled from the second quarter and were almost seven times higher than a year earlier as countries continued to diversify reserves, according to a World Gold Council report.

"At 148.4 metric tons, gold buying among central banks was at the highest since the sector became a net buyer of the precious metal in the second quarter of 2009, according to the quarterly report. "Central banks and other official institutions, by comparison, had bought 66.5 tons of gold in the second quarter and 22.6 tons in the third quarter of 2010."

These institutions buy gold by the metric tonne.  They aren't pikers like me who only buy tiny ounces.  Why don't they want to hold their paper?  I thought "cash was king."


Or, you could follow Tilson, Buffet, buy the S&P, or just hold on to your paper and get next to nothing in interest.  Move along, there is nothing to see here.  Gold is in a bubble, sell it all.

Silver: The People's Money

I thought this was quite an interesting article so thought I should forward it along:

http://www.gold-eagle.com/editorials_08/nielson110711.html

Jeff Nielson
7 November 2011

In my writing a couple of themes occur with regularity: how "fractional-reserve banking" (with purely fiat currencies) is nothing less than serial stealing from the general population; and how gold and silver can protect people from this cycle of theft.
 
With respect to fractional-reserve banking, the theft is obvious. The bankers print up vast quantities of their paper currencies 'out of thin air', at no cost to themselves - but with the full benefit of that money. Thus their own "wealth" increases exponentially, and without the bankers earning a single penny of it. However, by diluting our currencies in this reckless manner they drive down the value of our money - reflected in higher prices (i.e. reduced purchasing power). We get poorer and poorer; they get richer and richer.

Given that we have a corporate propaganda machine which has spent more than forty years trying to disguise this serial stealing, it is no surprise that it often takes a long time for this reality to sink into peoples' minds. Sadly, even once people understand the stealing which is taking place, they often aren't able to piece together how precious metals are the "cure" for this chronic condition.

When I speak of precious metals being our salvation from the bankers' world of debauched paper, for the average person what I mean specifically is that silver is their primary protection from the banksters' stealing-via-dilution. In referring to silver as "the people's money" I am not saying anything new here. Rather I am simply reiterating one of the oldest economic truths of our species.

To understand this first requires understanding two more of the most ancient concepts of humanity. To begin with, people must know the answer to the question "what is money?". Once they have a clear understanding there, it becomes crystal-clear why gold and silver are the best "money" our species has ever known - and the only "good money" in existence today.

Next readers need to understand the historic price ratio between gold and silver, or in other words they need to understand the 5,000 year old price relationship between the Metal of the Sun (gold) and the Metal of the Moon (silver). This historic 15:1 ratio is absolutely reinforced by the fact that this is also the approximate relative proportions of gold and silver in the Earth's crust. Thus 15:1 is the "natural" price ratio between gold and silver, and over the long term gold and silver prices must revert to that ratio.

Given that 15:1 ratio (and the much greater, current ratio today), this leads to an obvious inference. Gold, by virtue of being less common and thus more valuable is the "money" of the wealthy and governments. Conversely, by virtue of being more plentiful (but still "precious") silver has always been the Money of the People.

Once these preliminary concepts are understood, readers should be ready to absorb how and why silver can protect the ordinary person from the serial stealing of the bankers. Remembering how the bankers "steal" by diluting the paper (i.e. fiat currencies) we are holding, the obvious solution to that problem is to avoid holding the bankers' paper.

If we take the fruits of our labours and convert it into silver as quickly as possible, then suddenly the bankers must do most of their stealing from the other paper-holders - not us. And if every ordinary person converted their wealth to silver as quickly as possible, soon the bankers (and the ultra-wealthy for whom the bankers "front") would have no one to steal from but each other.

People need to divorce their minds from the notion of "buying silver", and rather simply think of themselves as doing their "saving" with silver rather than with the banksters' ever more diluted paper. Indeed, the worst thing we can possibly do with our wealth is to deposit it in a bank - since that simply allows the banksters to ratchet-up their "leverage" even further (i.e. steal from us even faster).

Put another way, every dollar which ordinary people convert to silver (or gold) weakens the intensity/effects of this stealing-via-dilution. This also explains the extreme aversion which the bankers have to a "gold standard", and why they have disseminated millions of pieces of propaganda over recent decades attempting to portray a gold standard as either being archaic or simply "impractical".

A gold standard is "impractical" indeed if one is a banker because when it comes to the banksters' efforts to steal-via-dilution, a gold standard functions like an "economic straitjacket", preventing the banksters from conjuring any "money" out of thin air. With the absolute refusal of our corrupt and servile politicians to "regulate" these financial crime syndicates, a gold standard would impose fiscal/monetary discipline (and sanity) on both bankster and politician alike.

Lacking a gold standard and lacking any financial regulation of these multinational banks, as individuals we have been left with absolutely no recourse but to "insure" our wealth by converting it to silver. Holding silver will not/cannot "fix" our economies by itself. However, with the self-destructive greed of the banksters and the shameless corruption of our political leaders, the destruction of our economies is now inevitable - and we must protect ourselves individually, since we have been abandoned by our own governments.

As it has done for nearly a hundred years, the corporate media defines such behavior as "hoarding". Strangely, when we (collectively) hold several billion dollars of silver the propaganda machine calls this "hoarding", yet these same media talking-heads never mention the word "hoarding" when it comes to the $10's of trillions in paper wealth being hoarded by these ultra-wealthy (ultra-greedy) misers.

As I have demonstrated in numerous previous commentaries, it is the "hollowing out" of our economies through the hoarding of all these $trillions which is one of the primary causes of our imminent economic collapse. In other words, it was bad enough to have the ultra-wealthy steal $trillions of our wealth, but they have compounded that economic harm by refusing to spend their ill-gotten hoards. If the "other 99%" greatly increase their "saving with silver" (or gold), this will also serve to slow down this hollowing-out process, and will at least help to delay our complete economic collapse.

Our economies remain in desperate need of a total overhaul of our entire monetary system, our tax systems, and our labour markets. Given the saturation level of corruption in our governments, it seems likely that most Western nations must also have radical reforms in their political systems as well.

Holding silver solves none of those other problems. At best, it will "buy us the time" to actually fix our broken economies (and broken political systems). At worst, it will make it a little easier to rebuild our societies from the economic "rubble" left behind by the banksters and their political servants.

Jeff Nielson

www.bullionbullscanada.com

The Gold Bubble Pops Yet Again

Big picture.  10-year chart of gold.



Green line is simple 200 day moving average.  Buy on that line for that last 10 years at any point for lowest risk entry points.  This is such a beautiful chart for studying primary bull market psychology.

First 4 years of this 10 year chart were a slow grind, from $250 area to $425.  Don't forget, for the previous 20 years gold went from $850 to $250.  Any gains here are long and hard because only the contrarians were piling in, being happy with the fact that they would most likely have to wait 17-20 years for the payday.  But paydays of these kinds are worth the wait because of enormous payoffs at the end.  People who bought in this range are already up 4x-6x and are not selling. 

Dec. 05 to May of 06, gold shoots from $450 to $720.  Naysayers were saying gold had tripled, blow off top, the bubble has burst, let's flip houses.  The absolute peak of the housing market, by the way, was about 10-06.  This is when I bought at $565.  My only question now is why didn't I buy more.

So it grinds along agonizingly for a year and a half doing nothing but sideways, and I bought more at $680.  Mind you $680 was near the highest gold had been for the last 27 years.  It was a bubble.  My only question again now is why didn't I buy more.

So the naysayers were wrong once again as the bubble burst in reverse and went from $680 to $1000 in a few short months.  Oh, all time highs, blow off top, bubble soon to burst.  Yet look at the 200 day moving average.  As Forest Gump said, "Keep your eye on the ball." 

So, OH MY GOD, gold shoots down for a minute to the $850 area, whoa, 15% pull back, end times and Armageddon, then Wall St. crashes and gold comes back and tests the $750 area again for a minute.  With the only serious but short breach of the 200 day moving average, gold still ends the year up 5% while the DOW gets ripped in half.

Since the last bubble has burst, gold has rebounded 133% in 3 years, and just look at the 200 day moving average.  As long as the trend continues up, that is the true gauge of whether gold is cheap in dollars or not.  Notice the angle of ascent of the 200-day moving average is increasing but is far from hyperbolic.  Volatility is increasing as is the rate of ascent.  This is big time classic bull behavior, in my humble opinion. 

These major bulls, for psychological reasons, often run for 17 to 20 years.  If they truly run in the 3 phases of 1. Contrarian, 2. Institutional, 3. Public, the question is where are we at now?

The price of gold has gone from $250 to $1900 and now $1740 per ounce with next to zero public involvement.  The public has been selling their gold, not buying it.  Just ask yourself how many individuals you know who own gold or silver.  I would guess the first phase of contrarians were buying from 2001 to 2008.  You could argue that the March, 2009 purchase by India of 200 metric tonnes of gold from the IMF at $1050/ounce signified the first serious involvement of central banks net buying of gold for the first time in 20 years.  Now the list of central banks buying gold is growing all the time.  Bet against the banksters if you think the public is outsmarting them.  I won't try to stop you.

Check out the latest chart from the St. Louis Fed Bank of the Adjusted Monetary Supply.  Is it any wonder that gold and everything else is going up when the money supply is exploding?



The rise in volatility and price would suggest to me that the smart money has been getting in for awhile now, 2 or 3 years.  From my trading experience I can tell you there is one thing traders need like blood to a vampire, and that is volatility.  Volatility has certainly increased in the last 3 years.  You can't make any money, even if you are right, if a stock or commodity isn't moving one way or the other.  Increased volatility draws traders like a virgin's blood draws Count Dracula.

So by the looks of the chart I would say we are likely in the 2nd phase of smart money/institutional involvement and will be there for some time yet to come.  There will be years of nominal price inflation of gold and everything else except real estate.  The real estate trend of down has not changed yet.

Yet the public remains on the sidelines, convinced they missed the move because gold is up 6x from the bottom.  Do you know how many times I have heard this argument?  Psychologically, gold struggled going over $500 because it was a double.  When it broke through $500 it hit $720 in no time.  Then sideways for a year and a half, then it had to psychologically break through the old high of $850.  Then $1000.  Now it is in uncharted territory.  Just 2 weeks ago I overheard a conversation where the consensus was gold was cooked and on the way to $1200 if not $800.  The public is yet to get interested.  Why should they?  The bubble has popped, no?  But of course the public always gets investing right, we know that from history.

And get this, the whole thing is an illusion.  Gold has not increased in value at all.  Gold is still gold.  What has happened is the devaluation of the dollar, period.  It takes more of the devalued money to buy the same amount of gold, period, end of story.  And everybody thinks gold is in a bubble.  This is the obvious mathematical and physical answer the to the problem.....gold nor anything else is in a bubble right now except US Treasury Bonds, and I guess as well you could say the remainder of the paper currencies of the world, but the US Treasury Bonds take the proverbial cake.  Gold is simply the canary in the mine.  The jig comes closer to being up day by day, and every day of our lives has seen lost purchasing power of our money.  They are printing money, and more of it all the time.  Gold is a distraction, nothing more.  But you ain't seen nothing yet.  Wait until the public gets interested.

The public's decision on gold must be emotional and based on protecting their ego because they missed out on the obvious best investment of the last decade.  The logical conclusion from the chart and all the evidence has been that gold has been and remains in a massive bull market.

Ask yourself, at the peak of the housing bubble, were people afraid of the price of houses and talking about their values getting ripped in half?  At the peak of the bubble, was the public calling it a bubble?  In the mean time I am buying more gold.  I have seen this movie before. The trend remains and the 200-day moving average is intact.  Could it go sideways for awhile?  Of course.  What will happen tomorrow or next week?  I am no psychic.  But a trend remains a trend until proven otherwise.  The last 10 years is proof of that obvious truism.  (Edwards & Magee, Technical Anaylisis).

But to tell you the truth, it's not the gold I crave so much as it is I know congress and the Fed are destroying my paper and I can't stand to hold it.  That is what will drive the public when the day comes.  Nobody want's to be a bag holder.