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ROUBINI ON THE DOLLAR CARRY TRADE & THE COMING CRASH

4 November 2009 by TPC 5 Comments

Roubini thinks we’re re-inflating the bubbles all over again &  a crash in risky assets is impending:

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  • Naa said:

    TPC -
    Would you be a buyer of Gold (GLD) at current price?

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    TPC Reply:
    November 4th, 2009 at 10:38 AM

    I am not a fan of “buy high and sell higher”. It tends not to work as planned….

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    Naa Reply:
    November 4th, 2009 at 2:51 PM

    Me neither, but Rosenberg’s comment on gold is interesting…

    Gold has broken out yet again and is up another 1% so far today as it begins to challenge the $1,100/oz mark (according to unofficial IMF estimates, the Reserve Bank of India bought gold at $1,045/oz. With the size of the purchase (8% of annual mined production) and at that price it certainly helps establish a floor!

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    Rob Reply:
    November 4th, 2009 at 7:53 PM

    Gold’s price is based on wild speculation and fiat currencies, especially the dollar, will be massively debased.

    I know a lot of people in inland California who bought homes in 2006 for double their 2004 price for fear that prices would double again by 2008. They are now sitting on a mortgage worth double the market value of their home. Fear does strange things to peoples perceptions of value.

    Fear of neverending inflation and a dollar collapse in the late seventies and early eighties brought on a similar panic which sent gold prices to more than double their current price and about 5 times their historical inflation adjusted price.

    My understanding is that India’s purchase was 200 metric tons or $7.5 billion of gold. The GLD has net assets of $35 billion. India’s purchase is only about 1/5 of the value of the GLD, but it increases India’s gold reserves by more than 50%. That puts things into a bit more perspective.

    I own some GLD but I bought it in August 2007 and I wouldn’t buy more today. I will probably sell half if gold gets to 1,300.

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    Humble Gentleman Reply:
    November 4th, 2009 at 7:38 PM

    It would really be nice if it took a breather for a couple of days. I’m still not ready for it to go parabolic.

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    # 4 November 2009 at 10:06 AM