DISQUS

Market Folly: John Burbank's Passport Capital Adds Massive Gold Stake: 13F Filing Q1 2009

  • jj · 5 months ago
    it's not really a contrarian sign when institutional wizzards start buying an asset. It's when your average mama luke gets in the game...come on, you know that.
  • marketfolly · 5 months ago
    hey JJ you're correct in that regard. But, when you consider that almost half of the funds we follow have all piled into gold... that says something. And, keep in mind that these holdings are as of March 31st 2009 and so a solid three months have gone by, allowing Joe Schmoe investor plenty of time to get in the trade.

    I think the media hype around Paulson's gold entrance was enough to put it over the edge. We're just discovering other funds that had made the same move but it wasnt publicized.
  • jj · 5 months ago
    well then...this would be the first bubble to pop without the participation of retail investors. In fact, retail investors are selling as much gold as they can to raise extra cash, likely to meet their growing debt burden. Like all other dips since 2000, investors will look back and wish they bought this dip. JJ
  • marketfolly · 5 months ago
    I apologize if I construed my thinking as "THE top" in gold... of course not. There is too much uncertainty around the markets for gold to crater. I am in favor of allocating a portion of a portfolio to gold. I was just implying that it is due for a near-term correction since so many have rushed in and it is due for a pause. The speed with which everyone entered the trade is what amazed me most. Billions of dollars into the gold trade over the course of 1 quarter means a pause is only healthy.

    Good point about the consumer shoring up personal balance sheets, that is a phenomenon I've been monitoring for a while now and consumer deleveraging will play a big part going forwards in both the economy and markets.
  • Cooper · 5 months ago
    I would think that their entry is not your signal to leave...rather it's your signal that things are just heating up; as more 'in the box' funds enter the gold fray they are the ones that will drive price up. Why leave when the booze and the band shows up to the party....it's just getting started. their entry is just the first drops of blood in shark infested waters....
  • marketfolly · 5 months ago
    hey Cooper you very well could be correct in that regard. I am just given pause in the near-term because this is literally the most hedge funds I've seen plow into one trade over the course of two quarters. It makes me think entering now would be at 'sucker' levels. But that said, longer term, it definitely could make sense here given all the uncertainty in the economy and markets.

    If everyone's already entered... who's left to buy? Just Joe Schmoe retail investor who of course always buys at the top haha. But I definitely see your point and we do like to see a confluence of smart minds all entering the same play, as it usually lands more conviction. Making me deeply think about my stance now haha