JohnQPublic
4th January 2011, 05:58 PM
AND THE 2010 WINNER IS……… (https://marketforceanalysis.com/article/latest_article_123110.html)
By Adrian Douglas
As 2010 winds down it is time to announce the runners-up and the winner of the coveted “Moron of the Year” (MOTY) Award.
The award is now in its fifth year. Although the MOTY provides some light entertainment it does also have a more serious intention. It serves to take to task, in a small way, those journalists and public officials who feel they can misinform or lie to the general public and investors alike with total impunity. People who are paid to give information to others have a duty to check what they say is accurate to the best of their ability. But the truth has become largely irrelevant to many of these people; it is an inconvenience that must be “spun” out of the way. I hope that those who are nominated might feel embarrassed enough to pay more attention to what they say and publish.
For those who are new to the MOTY Award tradition here are the previous winners:
2006 *Simon Constable, TheStreet.com
2007 *Jon Nadler, Senior Analyst of Kitco
2008 Dennis Gartman, Editor of the Gartman Letter
2009 Philip Klapwijk, GFMS Executive Chairman
* An asterisk denotes having been inducted into the Moron All Time Hall of Fame. A winner of the annual MOTY can win the award because of a momentary mental lapse that results in a totally moronic utterance; however, there are serial offenders who are genetically disposed to make moronic statements; with such individuals there is a high likelihood of them spewing moronic drivel every time they move their lips. No amount of public embarrassment from winning a MOTY can deter them from reoffending. Such individuals have a very good chance to be inducted into the MOTY Hall of Fame.
This year has been a busy year for the MOTY selection committee as we have tried to get Google interested in tracking MOTY winners and nominees through Google Earth so that if any of them move into your neighborhood you can immediately move house. So far they have been unable to resolve a bug in the software such that as soon as you type “moron” into the search field the map locks on to the Federal Reserve Building, the Capitol Building, or Jon Nadler’s house but they are working hard on it.
We have also been working on another initiative which is the MOTY Global Investment Fund. The concept is to execute all the trade recommendations of the MOTY Winners and the runner-up nominees. We think Goldman Sachs should jump at the idea if they can bet against their clients! What a great vehicle to go short on!
As in previous years the competition was fierce for who uttered the most moronic drivel with respect to precious metals or financial markets. Coming in at number 10….
Tenth Place: Charlie Munger, Co-Chairman Berkshire Hathaway
In a September 2010 speech at the University of Michigan Munger said
QUOTE
I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold. Even if it works, you're a jerk.
END
If you had invested in Berkshire Hathaway shares in April 2001 the gain through to December 2010 would be 76%. If instead you had bought gold then your gain would have been 441%. In fact gold has outperformed BRK-A shares on a 10 year, 5 year and one year comparison.
Mr Munger doesn’t see how you become rational hoarding gold! I don’t think I have ever seen any medical research that suggests that a cure for irrational thinking is hoarding gold; no one has ever proposed that “you become rational” by hoarding gold. Mr Munger, I can tell you that after comments like this even if YOU hoarded gold you would still be a moron.
I wonder what Mr. Munger thinks about hoarding silver. Berkshire Hathaway bought over 130 Mozs in 1997 and sold it at some unknown time before May 2006. Bufffett commented on the silver investment at the 2006 shareholder meeting saying that Berkshire had not benefited from the particularly steep rise in silver prices.
QUOTE
“I bought it very early, I sold it very early. Other than that it was perfect,” he joked.
END
Now if an investment works AFTER you have sold it you have to really be a jerk!
Ninth Place: James Bullard, Governor of Federal Reserve
FED Governor James Bullard in this CNBC interview is asked about Ron Paul
He says he loves it when Ron Paul talks about letting markets work! He apparently agrees with that sentiment. That is nothing short of moronic for an outfit that has interfered in the markets to the tune of 12 T$ in 21,000 transactions in the last two years. He also says the FED doesn’t care what other countries think about US monetary policy! Someone needs to tell him that the US$ is the global reserve currency so this is not just a domestic issue!
Eighth Place: Peter Toogood, Old Broad Street Research
CNBC managed to dig up this moron Peter Toogood, Head of Investment at Old Broad Street Research. He might be better changing his name to Toostupid!
QUOTE
Buy Gold? People Bought Tulips Once - By: Jeannie Clarke August 13, 2010
Gold is near a four-week high as concerns for the health of the global economy push investors into safe-havens assets. But one investor says the precious metal is overpriced.
“Ask someone what gold is worth and the answer will now be: what someone will pay,” Peter Toogood, head of investment at Old Broad Street Research, said.. “That is the reality of gold today.”
More than 50 percent of gold purchases come from exchange traded funds-related investment demand, Toogood said.
“It has nothing to do with fabrication or usage of gold. It is storing it in a vault,” he said.
Another argument against buying the precious metal is that it has no scarcity value, Toogood added.. Unlike a rare piece of art, gold is in plentiful supply.
“I think the point being in a capitalist system, (a Picasso) is given a value for a reason, (it) has scarcity value. Gold has none. You can get it out of the ground,” he said.
There are also concerns about liquidity, he said.
“There are pawn shops you can go to," he said. "Send it in the post apparently and they will give you some cash for it. Oh my gosh, how much more bubbly do we want to get?"
Toogood also gave some guidelines on how to give value to a product, and how to define worth.
“Something that gives you a yield for a starting point. For me, that is one way you can define value,” he said.. “Secondly gold has no linearity. Linearity and yield. Gold doesn’t have either of those.”
Even the aesthetic value of gold is no reason to buy, according to Toogood.
“People liked tulips once as well. Good luck to them,” he said.
END
My favorite quote is “Unlike a rare piece of art, gold is in plentiful supply. I think the point being in a capitalist system, (a Picasso) is given a value for a reason, (it) has scarcity value. Gold has none. You can get it out of the ground.”
That is side splittingly funny. Gold is in fact very rare and only occurs on average at a concentration of 5 parts per billion in the earth’s crust. On the other hand gold is priced in fiat paper currencies which can be produced instantaneously as computer digits at almost no cost.
Gold was trading at $1214/oz and silver at $18/oz when this interview hit the wires in August this year. When you see commentary like this you know the precious metal bull market has a long way to run. Even after gold having been the best performing asset for 10 years with an average return of over 17% per annum there are still many so called analysts who can churn out this type of drivel! The parting shot of “people liked tulips once as well” is just so blatantly moronic that is makes me suspect his whole purpose in writing the article was to get in the running for a 2010 MOTY! Well, Peter Toogood, tough luck! You didn’t win; so you will have to try harder for next year, which I am sure you will, after all, you forgot to mention the South Sea Bubble.
Seventh Place: Peter Tasker, Analyst with Arcus Research
This is a real corker! Peter Tasker managed to pack endless amounts of moronic drivel about gold into this fairly short article. The author argues that the Japanese Yen is a superior investment to gold! In fact he claims gold is not an investment at all! Of course this complete drivel is published by that bastion of fair and unbiased gold market analysis and reporting, The Financial Times!
QUOTE
Yen has edge over gold in battle for supremacy - By Peter Tasker
Published: August 4 2010
There are not many financial assets that are priced higher today than before the Lehman shock in September 2008. Two that have done investors proud are the yen and gold bullion.
At first there seems little in common between the yellow metal, which has been a store of value through the ages, and the currency of a country with feeble economic growth and Godzilla-sized government debt. Yet both are perceived as havens of safety in a troubled world. Strangely, the yen may be the more deserving of that accolade.
Historically gold was indeed a store of value – until it became just another financial market asset, subject to the swings of speculative sentiment and hot money flows. The last bull market peaked out 30 years ago. The bottom of the subsequent bear market was marked by the UK Treasury’s sale of its gold reserves in 2001.
Over the intervening two decades, gold delivered a capital loss of more than 80 per cent in real terms, a performance far worse than any comparable period of equity market returns. Rather than storing value, gold destroyed it in spectacular style.
The reason is simple. By 1980, gold had become a classic mania, having risen 20 times since the closing of the gold window in 1971. Investors may have thought they were acting prudently at a time when the world seemed to be racing towards monetary Armageddon. In fact they were driving by the rear-view mirror – ignoring the extraordinary cheapness of equities in favour of the asset that had done the best in the past decade.
This time, the rise in the gold price is more modest – so far – but the irrationality of investors is, if anything, greater. At least in the 1970s it was clear what investors were hedging against – inflation.
More recently, the gold price has risen through a period of low inflation. Half of the increase took place in the 2003-07 period when global growth was strong and credit concerns minimal. The other half took place in periods of recessions and financial stress. Gold has become an all-weather investment, rising in both boom and bust.
The inconvenient truth is that gold is not really an investment at all. Since it generates no return and thus has no fundamental value, the same arguments can be used to justify any price – $500 an ounce or $5,000. Gold buyers are simply trusting in the bigger fool theory – that someone else will take it off their hands at a higher price. They are speculating, not investing, and like all speculators what they are speculating on is the speculations of other speculators. Packaging it in an exchange-traded fund makes no difference.
The yen, unlike gold, is under-owned. Few non-Japanese investors own yen cash or bonds, and central bank holdings are similarly derisory. Recent reports of a small purchase of Japanese government bonds by the Chinese government were enough to power it to a new high.
Furthermore despite the rise in its nominal value, the yen is not particularly expensive in real terms – thanks to year after year of untreated deflation. According to the Bank of Japan’s index of the real effective yen rate, it is much closer to its lows than highs of the past 20 years. In fact if the yen were to reach the highs of 1995, when it touched 79 to the dollar, it would need to rise another 50 per cent in real terms.
Best of all, the yen is not a sterile asset like gold. It generates a return. Officially CPI deflation is 1.5 per cent, which means holders of yen get a tax-free gain of 1.5 per cent in purchasing power every year. However, according to the American scholar David Weinstein, the official numbers understate Japanese deflation by several percentage points.
If he’s right – and intuitively 1.5 per cent does seem too low – then Japanese cash is generating a very competitive return. Maybe that’s why Japanese households and companies have been stockpiling it, come rain or shine.
There is a wrinkle. The supply of gold is small and constrained, whereas the Bank of Japan can create as much yen as it likes. This is exactly what several foreign observers and, increasingly, Japanese politicians have been recommending.
However, Prime Minister Naoto Kan’s disastrous decision to fight the recent Upper House election on a tax-hiking programme has thrown the political scene into chaos. Japan’s politicians are in no position to pressure anyone.
Of course the BoJ could change policy by itself, but that would mean admitting that its fundamental philosophy was wrong, which is about as likely as a midwinter cherry blossom. The battle for supremacy between the yen and gold looks set to continue.
END
This piece is great entertainment value. I couldn’t stop myself from laughing at this corker
“The inconvenient truth is that gold is not really an investment at all. Since it generates no return and thus has no fundamental value, the same arguments can be used to justify any price – $500 an ounce or $5,000. Gold buyers are simply trusting in the bigger fool theory – that someone else will take it off their hands at a higher price. They are speculating, not investing, and like all speculators what they are speculating on is the speculations of other speculators. Packaging it in an exchange-traded fund makes no difference.
The yen, unlike gold, is under-owned. Few non-Japanese investors own yen cash or bonds, and central bank holdings are similarly derisory”
But, Peter, the “bigger fool” theory isn’t meant to refer to a contest between analysts!
Gold has no fundamental value BUT the yen has?? And unlike gold the yen is under-owned?? And there is a good reason why it’s under-owned! I wonder if he actually believes his own drivel and whether he shorted gold on the TOCOM. There is a clue in his article that he is not so much of a moron to follow his own advice because he admits his analysis is flawed:
“There is a wrinkle. The supply of gold is small and constrained, whereas the Bank of Japan can create as much yen as it likes. This is exactly what several foreign observers and, increasingly, Japanese politicians have been recommending.”
And he only calls that a “wrinkle”??!
I suspect Peter Tasker must be a good friend of Charlie Munger!
Sixth Place: James Altucher, Founder Formula Capital
James Altucher recived a nomination for a 2010 MOTY for this drivel.
QUOTE
Buying Gold Is a Mistake -- Stocks Offer Better Returns, James Altucher Says
Posted Aug 19, 2010 by Peter Gorenstein
Through the tumult of the last two years, few assets have held up better than gold. That, however, is no reason to buy the shiny metal, says James Altucher.
"It's had its run because we've had enormous fear in the market," says the Formula Capital founder in this clip. "Whenever there's such huge investment uncertainty, like we've had for the past decade, gold is going to go up."
It sure has.
Gold has increased five-fold in the last decade and currently trades for more than $1,200 an ounce. But, compared with stocks, gold is a laggard, he writes in a recent Wall Street Journal column:
"Gold reached its peak in 1980 when it reached $800 an ounce, which is $2,000 in today's dollars. So in real terms, gold has lost about 40% of its value since 1980. In the meantime, the stock market has gone up about 500% in real terms.
"Some other time frames for comparison: From 1975 (post the U.S. getting off the gold standard) to now, gold is up 500%. The Dow is up 900%. Gold was worth about $20 an ounce in 1800. Since then it's averaged a 2% gross return. Subtract out the costs of mining and storing gold, and what you have is basically a worthless rock that has a net negative return as an investment."
Besides, "gold will never write you a check," he says, comparing gold to dividend-yielding stocks. Altucher would much rather buy stocks that "consistently grow earnings and dividends over time." Not only will stocks like McDonald's, Procter & Gamble and Johnson & Johnson pay a dividend, they, like gold, act as a hedge on the U.S. dollar, thanks to their large and growing international businesses.
Despite his stance against gold, Altucher does recommend buying one gold stock: Kingold Jewelry. "They're able to pass on the cost increase of gold to their customers, and if gold decreases, which I expect it will, they'll get a larger spread," he notes.
END
When anthropologists claim that humans are more intelligent than monkeys I think they should be more precise about which humans they are referring to!
Altucher has arbitrarily chosen 1975 and the peak of the last gold bull in 1980 for his comparison only because it suits his argument. Before 1971 the US was on a gold exchange standard and the price of gold was fixed so gold was money, it was not an investment. The last official gold price before Nixon closed the gold window was $42.22/oz so gold has risen 33 fold (to $1400 at the time of writing) while the Dow Jones Industrials has risen only 13 fold. Gold has outperformed stocks since gold was no longer fixed by the monetary system by almost a factor of three, and that is even with gold being suppressed by governments and the bullion banks!
The best returns would have been achieved by being in gold from 1971-1980, in equities 1980-2000 and gold from 2000 to the present.
The remark that clinched his runner-up nomination was “Gold was worth about $20 an ounce in 1800. Since then it's averaged a 2% gross return. Subtract out the costs of mining and storing gold, and what you have is basically a worthless rock that has a net negative return as an investment."
You would think it would be hard to make a more moronic statement than that, but read on!
CONTINUED
By Adrian Douglas
As 2010 winds down it is time to announce the runners-up and the winner of the coveted “Moron of the Year” (MOTY) Award.
The award is now in its fifth year. Although the MOTY provides some light entertainment it does also have a more serious intention. It serves to take to task, in a small way, those journalists and public officials who feel they can misinform or lie to the general public and investors alike with total impunity. People who are paid to give information to others have a duty to check what they say is accurate to the best of their ability. But the truth has become largely irrelevant to many of these people; it is an inconvenience that must be “spun” out of the way. I hope that those who are nominated might feel embarrassed enough to pay more attention to what they say and publish.
For those who are new to the MOTY Award tradition here are the previous winners:
2006 *Simon Constable, TheStreet.com
2007 *Jon Nadler, Senior Analyst of Kitco
2008 Dennis Gartman, Editor of the Gartman Letter
2009 Philip Klapwijk, GFMS Executive Chairman
* An asterisk denotes having been inducted into the Moron All Time Hall of Fame. A winner of the annual MOTY can win the award because of a momentary mental lapse that results in a totally moronic utterance; however, there are serial offenders who are genetically disposed to make moronic statements; with such individuals there is a high likelihood of them spewing moronic drivel every time they move their lips. No amount of public embarrassment from winning a MOTY can deter them from reoffending. Such individuals have a very good chance to be inducted into the MOTY Hall of Fame.
This year has been a busy year for the MOTY selection committee as we have tried to get Google interested in tracking MOTY winners and nominees through Google Earth so that if any of them move into your neighborhood you can immediately move house. So far they have been unable to resolve a bug in the software such that as soon as you type “moron” into the search field the map locks on to the Federal Reserve Building, the Capitol Building, or Jon Nadler’s house but they are working hard on it.
We have also been working on another initiative which is the MOTY Global Investment Fund. The concept is to execute all the trade recommendations of the MOTY Winners and the runner-up nominees. We think Goldman Sachs should jump at the idea if they can bet against their clients! What a great vehicle to go short on!
As in previous years the competition was fierce for who uttered the most moronic drivel with respect to precious metals or financial markets. Coming in at number 10….
Tenth Place: Charlie Munger, Co-Chairman Berkshire Hathaway
In a September 2010 speech at the University of Michigan Munger said
QUOTE
I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold. Even if it works, you're a jerk.
END
If you had invested in Berkshire Hathaway shares in April 2001 the gain through to December 2010 would be 76%. If instead you had bought gold then your gain would have been 441%. In fact gold has outperformed BRK-A shares on a 10 year, 5 year and one year comparison.
Mr Munger doesn’t see how you become rational hoarding gold! I don’t think I have ever seen any medical research that suggests that a cure for irrational thinking is hoarding gold; no one has ever proposed that “you become rational” by hoarding gold. Mr Munger, I can tell you that after comments like this even if YOU hoarded gold you would still be a moron.
I wonder what Mr. Munger thinks about hoarding silver. Berkshire Hathaway bought over 130 Mozs in 1997 and sold it at some unknown time before May 2006. Bufffett commented on the silver investment at the 2006 shareholder meeting saying that Berkshire had not benefited from the particularly steep rise in silver prices.
QUOTE
“I bought it very early, I sold it very early. Other than that it was perfect,” he joked.
END
Now if an investment works AFTER you have sold it you have to really be a jerk!
Ninth Place: James Bullard, Governor of Federal Reserve
FED Governor James Bullard in this CNBC interview is asked about Ron Paul
He says he loves it when Ron Paul talks about letting markets work! He apparently agrees with that sentiment. That is nothing short of moronic for an outfit that has interfered in the markets to the tune of 12 T$ in 21,000 transactions in the last two years. He also says the FED doesn’t care what other countries think about US monetary policy! Someone needs to tell him that the US$ is the global reserve currency so this is not just a domestic issue!
Eighth Place: Peter Toogood, Old Broad Street Research
CNBC managed to dig up this moron Peter Toogood, Head of Investment at Old Broad Street Research. He might be better changing his name to Toostupid!
QUOTE
Buy Gold? People Bought Tulips Once - By: Jeannie Clarke August 13, 2010
Gold is near a four-week high as concerns for the health of the global economy push investors into safe-havens assets. But one investor says the precious metal is overpriced.
“Ask someone what gold is worth and the answer will now be: what someone will pay,” Peter Toogood, head of investment at Old Broad Street Research, said.. “That is the reality of gold today.”
More than 50 percent of gold purchases come from exchange traded funds-related investment demand, Toogood said.
“It has nothing to do with fabrication or usage of gold. It is storing it in a vault,” he said.
Another argument against buying the precious metal is that it has no scarcity value, Toogood added.. Unlike a rare piece of art, gold is in plentiful supply.
“I think the point being in a capitalist system, (a Picasso) is given a value for a reason, (it) has scarcity value. Gold has none. You can get it out of the ground,” he said.
There are also concerns about liquidity, he said.
“There are pawn shops you can go to," he said. "Send it in the post apparently and they will give you some cash for it. Oh my gosh, how much more bubbly do we want to get?"
Toogood also gave some guidelines on how to give value to a product, and how to define worth.
“Something that gives you a yield for a starting point. For me, that is one way you can define value,” he said.. “Secondly gold has no linearity. Linearity and yield. Gold doesn’t have either of those.”
Even the aesthetic value of gold is no reason to buy, according to Toogood.
“People liked tulips once as well. Good luck to them,” he said.
END
My favorite quote is “Unlike a rare piece of art, gold is in plentiful supply. I think the point being in a capitalist system, (a Picasso) is given a value for a reason, (it) has scarcity value. Gold has none. You can get it out of the ground.”
That is side splittingly funny. Gold is in fact very rare and only occurs on average at a concentration of 5 parts per billion in the earth’s crust. On the other hand gold is priced in fiat paper currencies which can be produced instantaneously as computer digits at almost no cost.
Gold was trading at $1214/oz and silver at $18/oz when this interview hit the wires in August this year. When you see commentary like this you know the precious metal bull market has a long way to run. Even after gold having been the best performing asset for 10 years with an average return of over 17% per annum there are still many so called analysts who can churn out this type of drivel! The parting shot of “people liked tulips once as well” is just so blatantly moronic that is makes me suspect his whole purpose in writing the article was to get in the running for a 2010 MOTY! Well, Peter Toogood, tough luck! You didn’t win; so you will have to try harder for next year, which I am sure you will, after all, you forgot to mention the South Sea Bubble.
Seventh Place: Peter Tasker, Analyst with Arcus Research
This is a real corker! Peter Tasker managed to pack endless amounts of moronic drivel about gold into this fairly short article. The author argues that the Japanese Yen is a superior investment to gold! In fact he claims gold is not an investment at all! Of course this complete drivel is published by that bastion of fair and unbiased gold market analysis and reporting, The Financial Times!
QUOTE
Yen has edge over gold in battle for supremacy - By Peter Tasker
Published: August 4 2010
There are not many financial assets that are priced higher today than before the Lehman shock in September 2008. Two that have done investors proud are the yen and gold bullion.
At first there seems little in common between the yellow metal, which has been a store of value through the ages, and the currency of a country with feeble economic growth and Godzilla-sized government debt. Yet both are perceived as havens of safety in a troubled world. Strangely, the yen may be the more deserving of that accolade.
Historically gold was indeed a store of value – until it became just another financial market asset, subject to the swings of speculative sentiment and hot money flows. The last bull market peaked out 30 years ago. The bottom of the subsequent bear market was marked by the UK Treasury’s sale of its gold reserves in 2001.
Over the intervening two decades, gold delivered a capital loss of more than 80 per cent in real terms, a performance far worse than any comparable period of equity market returns. Rather than storing value, gold destroyed it in spectacular style.
The reason is simple. By 1980, gold had become a classic mania, having risen 20 times since the closing of the gold window in 1971. Investors may have thought they were acting prudently at a time when the world seemed to be racing towards monetary Armageddon. In fact they were driving by the rear-view mirror – ignoring the extraordinary cheapness of equities in favour of the asset that had done the best in the past decade.
This time, the rise in the gold price is more modest – so far – but the irrationality of investors is, if anything, greater. At least in the 1970s it was clear what investors were hedging against – inflation.
More recently, the gold price has risen through a period of low inflation. Half of the increase took place in the 2003-07 period when global growth was strong and credit concerns minimal. The other half took place in periods of recessions and financial stress. Gold has become an all-weather investment, rising in both boom and bust.
The inconvenient truth is that gold is not really an investment at all. Since it generates no return and thus has no fundamental value, the same arguments can be used to justify any price – $500 an ounce or $5,000. Gold buyers are simply trusting in the bigger fool theory – that someone else will take it off their hands at a higher price. They are speculating, not investing, and like all speculators what they are speculating on is the speculations of other speculators. Packaging it in an exchange-traded fund makes no difference.
The yen, unlike gold, is under-owned. Few non-Japanese investors own yen cash or bonds, and central bank holdings are similarly derisory. Recent reports of a small purchase of Japanese government bonds by the Chinese government were enough to power it to a new high.
Furthermore despite the rise in its nominal value, the yen is not particularly expensive in real terms – thanks to year after year of untreated deflation. According to the Bank of Japan’s index of the real effective yen rate, it is much closer to its lows than highs of the past 20 years. In fact if the yen were to reach the highs of 1995, when it touched 79 to the dollar, it would need to rise another 50 per cent in real terms.
Best of all, the yen is not a sterile asset like gold. It generates a return. Officially CPI deflation is 1.5 per cent, which means holders of yen get a tax-free gain of 1.5 per cent in purchasing power every year. However, according to the American scholar David Weinstein, the official numbers understate Japanese deflation by several percentage points.
If he’s right – and intuitively 1.5 per cent does seem too low – then Japanese cash is generating a very competitive return. Maybe that’s why Japanese households and companies have been stockpiling it, come rain or shine.
There is a wrinkle. The supply of gold is small and constrained, whereas the Bank of Japan can create as much yen as it likes. This is exactly what several foreign observers and, increasingly, Japanese politicians have been recommending.
However, Prime Minister Naoto Kan’s disastrous decision to fight the recent Upper House election on a tax-hiking programme has thrown the political scene into chaos. Japan’s politicians are in no position to pressure anyone.
Of course the BoJ could change policy by itself, but that would mean admitting that its fundamental philosophy was wrong, which is about as likely as a midwinter cherry blossom. The battle for supremacy between the yen and gold looks set to continue.
END
This piece is great entertainment value. I couldn’t stop myself from laughing at this corker
“The inconvenient truth is that gold is not really an investment at all. Since it generates no return and thus has no fundamental value, the same arguments can be used to justify any price – $500 an ounce or $5,000. Gold buyers are simply trusting in the bigger fool theory – that someone else will take it off their hands at a higher price. They are speculating, not investing, and like all speculators what they are speculating on is the speculations of other speculators. Packaging it in an exchange-traded fund makes no difference.
The yen, unlike gold, is under-owned. Few non-Japanese investors own yen cash or bonds, and central bank holdings are similarly derisory”
But, Peter, the “bigger fool” theory isn’t meant to refer to a contest between analysts!
Gold has no fundamental value BUT the yen has?? And unlike gold the yen is under-owned?? And there is a good reason why it’s under-owned! I wonder if he actually believes his own drivel and whether he shorted gold on the TOCOM. There is a clue in his article that he is not so much of a moron to follow his own advice because he admits his analysis is flawed:
“There is a wrinkle. The supply of gold is small and constrained, whereas the Bank of Japan can create as much yen as it likes. This is exactly what several foreign observers and, increasingly, Japanese politicians have been recommending.”
And he only calls that a “wrinkle”??!
I suspect Peter Tasker must be a good friend of Charlie Munger!
Sixth Place: James Altucher, Founder Formula Capital
James Altucher recived a nomination for a 2010 MOTY for this drivel.
QUOTE
Buying Gold Is a Mistake -- Stocks Offer Better Returns, James Altucher Says
Posted Aug 19, 2010 by Peter Gorenstein
Through the tumult of the last two years, few assets have held up better than gold. That, however, is no reason to buy the shiny metal, says James Altucher.
"It's had its run because we've had enormous fear in the market," says the Formula Capital founder in this clip. "Whenever there's such huge investment uncertainty, like we've had for the past decade, gold is going to go up."
It sure has.
Gold has increased five-fold in the last decade and currently trades for more than $1,200 an ounce. But, compared with stocks, gold is a laggard, he writes in a recent Wall Street Journal column:
"Gold reached its peak in 1980 when it reached $800 an ounce, which is $2,000 in today's dollars. So in real terms, gold has lost about 40% of its value since 1980. In the meantime, the stock market has gone up about 500% in real terms.
"Some other time frames for comparison: From 1975 (post the U.S. getting off the gold standard) to now, gold is up 500%. The Dow is up 900%. Gold was worth about $20 an ounce in 1800. Since then it's averaged a 2% gross return. Subtract out the costs of mining and storing gold, and what you have is basically a worthless rock that has a net negative return as an investment."
Besides, "gold will never write you a check," he says, comparing gold to dividend-yielding stocks. Altucher would much rather buy stocks that "consistently grow earnings and dividends over time." Not only will stocks like McDonald's, Procter & Gamble and Johnson & Johnson pay a dividend, they, like gold, act as a hedge on the U.S. dollar, thanks to their large and growing international businesses.
Despite his stance against gold, Altucher does recommend buying one gold stock: Kingold Jewelry. "They're able to pass on the cost increase of gold to their customers, and if gold decreases, which I expect it will, they'll get a larger spread," he notes.
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When anthropologists claim that humans are more intelligent than monkeys I think they should be more precise about which humans they are referring to!
Altucher has arbitrarily chosen 1975 and the peak of the last gold bull in 1980 for his comparison only because it suits his argument. Before 1971 the US was on a gold exchange standard and the price of gold was fixed so gold was money, it was not an investment. The last official gold price before Nixon closed the gold window was $42.22/oz so gold has risen 33 fold (to $1400 at the time of writing) while the Dow Jones Industrials has risen only 13 fold. Gold has outperformed stocks since gold was no longer fixed by the monetary system by almost a factor of three, and that is even with gold being suppressed by governments and the bullion banks!
The best returns would have been achieved by being in gold from 1971-1980, in equities 1980-2000 and gold from 2000 to the present.
The remark that clinched his runner-up nomination was “Gold was worth about $20 an ounce in 1800. Since then it's averaged a 2% gross return. Subtract out the costs of mining and storing gold, and what you have is basically a worthless rock that has a net negative return as an investment."
You would think it would be hard to make a more moronic statement than that, but read on!
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