Dec

4

Gold, from Victor Niederhoffer

December 4, 2009 |

One wonders if 1200 is a price of reflection in gold.

Allen Gillespie replies:

Bernanke is a Depression scholar hence he must believe the key to ending the Depression was the end of the gold standard which raised the price to $35 per ounce from $20.67, a full 69%.  The decision was made on or around 3/6/09 when he made a deal with the devil at 666 on the S&P and Citigroup reported things were improving.  A 69% change in the price level from that date would be 1125 on the S&P, 11200 or so on the Dow and just above 1550 on gold and a level equal to the old S&P high.

A Quant Asset Allocation Spec writes in:

I contemplated the matter and decided Tuesday that enough was enough, and to not further engage in hog-like behavior; although without enough conviction to lean against the powerful move. My greatest concern now is in which asset(s) to establish a new position. Is the re-flation trade nearing an end? Paramount to me is reducing excessive intra-portfolio correlation risk without getting run-over. Is building a larger cash position appropriate, and if it is, in which currency?


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