Gold's Time Cometh
Research for Online Investors

by John Dalt

11/04/09

I came across a note about Paul Tudor Jones; he is a legendary trader and Hedge Fund Manager.  It inspired my curiosity, so spending a couple of hours reading about Mr. Jones did not seem like a waste of time.

Mr. Jones started in the cotton trading business after college, answering the phone.  He was fired for falling asleep after a night of revelry.  He then moved to New York, telling his parents he wanted to “try something new.”  He made millions in the crash of 1987, started his hedge fund and had a streak of over 20 years without a losing year.  PBS made a documentary about him in the ‘80’s; he did not like it, so he bought up all the copies and asked PBS to remove it from circulation.  It is not available, except a few bootleg copies that command hundreds of dollars.

At various times in your life, you may have faced the task of delivering a speech.  I can speak from my experience, this is an honor approached with some trepidation.  What do I say that does not sound trite or even worse, stupid?  Here is Paul Tudor Jones’ commencement speech to ninth graders.  I think you will enjoy it, from a very successful trader and man.

Oh, one other thing, Mr. Jones is bullish on gold.  Referring to gold, “ It is just an asset that, like everything else in life, has its time and place. And now is that time.”

The big news yesterday was India buying two hundred tonnes of gold from the International Monetary Fund (IMF). The IMF had 403.3 tonnes for sale, so India bought half of it. Who will buy the other 203.3? China said they would consider buying it all, as we reported on Sept. 22 in our MarketToday article, “China Buys U.S.” Did this sale effectively set a floor on the price of gold? I expect an announcement any day that China has bought the rest of the IMF’s gold.

The IMF hoard had acted as an anvil around the neck of gold, traders were fearful of it hitting the open market.  Now that half has been removed, with the rest sooner rather than later, traders are looking at the landscape.  Governments moving to gold, and away from the dollar indicate buying pressure on a scale that dwarfs corner retailers.  India’s purchase was valued at just $6.7 billion.  According to the China Post, “China reserves rise to record $1.9 trillion” at the end of September 2009.  All told; governments, banks, insurance companies, funds and individuals hold just over $200 trillion in financial assets, with less than one-half of one-percent in gold.

You may want to re-read an article that has been gathering dust in our Investor Resources section, “Who will Send Gold over $2000”  This article was sent to us by George Kengott with First National Bullion last April.  One of the more succinct quotes, “Let’s say a small percentage of the world’s central banks - or simply the United Arab Emirates itself - do not believe President Obama’s pledge that he will halve the U.S. deficit by the end of his first term. They shift some of their dollar reserves to gold. It would not take many decisions of this kind to push the price above $2,000 per ounce.”  Well, it seems India just voted their pocketbook, and China has said they would too.  These countries along with our friends in Russia, OPEC, Japan, and S. Korea have worked on replacing crude oil pricing with a ‘basket of currencies’ rather than the dollar.

I had the pleasure of talking with one of our subscribers who trades precious metals full time.  He is not as bullish on gold as I, "Gold today is priced for every part to work perfectly."  This is sage advice, as rarely do things work out perfectly.  The Fed's announcement this afternoon dropped gold immediately.  I am not a pessimist by nature, far from it, but I can't help see precious metals as protection from foolishness.  We still need to be careful entering the market, or we can get our heads handed to us!

" How about insider trading…the moment it (BRK buying BNI) was announced on CNBC…the stock (BNI) was already at $96!  The same thing with Black and Decker last night.  Regular people don't even have a chance.  Only the insiders.  This is a pile of crap!" —Subscriber T.M.

I am just glad we were not short BNI in the SwingTrader!  According to Yahoo Finance, there were possibly 3 million shares short.  This is rocket fuel as they try to cover before the stock goes any higher.  An immediate 27% loss, outside of trading hours (with very liquidity) is a tough place to be caught.  I will report any rumors of Insider Trading; it is hard to keep big news quite. —John Dalt

After last nights election results, it seems a good time to repeat my favorite painting.

So I said to him, "Barak, I know Abe Lincoln, and you ain't him."

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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