This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Ambrose Evans-Pritchard (Telegraph): Is $6,300 fair value for gold? November 19, 2009. The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs. Dylan Grice from Société Générale says it smells much the same today. He sees an eerie similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965.

• Gregory Zuckerman (The Wall Street Journal): John Paulson making big new bet on gold, November 19, 2009. John Paulson, who scored about $20 billion of profits between 2007 and early

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David Einhorn, highly respected hedge fund manager of Greenlight Capital and author of “Fooling some of the people all of the time” yesterday delivered the keynote address at the Value Investing Congress. His full speech can be accessed here, but Rolfe Winkler of Reuters has very handily published the highlights, as posted below.

On Bernanke and Geithner: Presently, Ben Bernanke and Tim Geithner have become the quintessential short-term decision makers. They explicitly “do whatever it takes” to “solve one problem at a time” and deal with the unintended consequences later. It is too soon for history to evaluate their work, because there hasn’t been time for the unintended consequences of the “do whatever it takes” decision-making to materialize.

On too big to fail and the true lesson of Lehman: The proper way to deal with too-big-to-fail, or too inter-connected to fail, is to make sure

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Paul Volcker, former chairman of the Federal Reserve, is arguably one of the wisest men on the economy. In this two-part conversation with Charlie Rose, he sheds light on the global economic crisis, how we got here, where we are, and what is next for us. Don’t miss this one.

Part 1:

Part 2:

Source: Charlie Rose (here and here), September 29 & 30, 2009.

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Not much happened yesterday. The Dow fell 47 points. The newspapers attributed the reversal to surprisingly low consumer confidence numbers. Apparently, consumers aren’t so sure this crisis is over. As we reported yesterday, they’re saving money… maybe even at an 8% rate.

Oil didn’t move yesterday. Neither did gold.

The Wall Street Journal reported that markets were reacting to “mixed data”.

That is to say, some reports were encouraging. Others were not. It was as if one weather forecaster called for a blizzard. The other for sunny skies and warm temperatures. Investors didn’t know how to dress.

Among the dark clouds was an item on the falloff in tax revenues. States are having a hard time balancing their books, because their tax receipts are declining. The WSJ reports that they are running 17% below last year.

Since states cannot print money, they’re forced to make cutbacks – typically reducing hours worked per employee as

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Spencer (Angry Bear): Stock market when EPS growth turns positive, September 18, 2009. Unless the economy-market is on the verge of a major unforeseen calamity S&P 500 earnings per share growth will turn positive in the fourth quarter. Generally analysts are positive on the market because they expect very strong earnings growth in 2010. This will be the twelfth time since 1950 that earnings growth has turned positive.

• Jennifer Hughes (Financial Times): Risks of treading in the tracks of fallen angels, September 19, 2009. Talk about recovery and equity, not bond markets, are the classic upside bet. But this is not likely to be a strong, rapid recovery; instead, most economists are forecasting something far more tentative and

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This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

• Byron Wien (Financial Times): Focus on big ideas for the best chance of future returns, September 15, 2009. For some time now I have wondered why investors spend so much time trying to anticipate small changes in corporate performance or economic activity, when it is the big shifts that provide the greatest opportunity to make serious money. Perhaps it is easier to figure out whether a company’s quarterly earnings are going to beat the estimates of security analysts or whether the monthly unemployment rate will be higher or lower than expected, but I believe it is better to spend your time trying to think through important trend changes and then waiting them out.

• Andrew Ross Sorkin (The New York

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If there’s anyone worth listening to in Washington these days, it’s Paul Volcker. So why is the great man nowhere to be found? When it comes to the ups and downs of the economy, there is only...div class="feedflare" a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=cgyHi49vu5I:gbrPozSygcY:yIl2AUoC8zA"img src="http://feeds.feedburner.com/~ff/taipan?d=yIl2AUoC8zA" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=cgyHi49vu5I:gbrPozSygcY:V_sGLiPBpWU"img src="http://feeds.feedburner.com/~ff/taipan?i=cgyHi49vu5I:gbrPozSygcY:V_sGLiPBpWU" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=cgyHi49vu5I:gbrPozSygcY:F7zBnMyn0Lo"img src="http://feeds.feedburner.com/~ff/taipan?i=cgyHi49vu5I:gbrPozSygcY:F7zBnMyn0Lo" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=cgyHi49vu5I:gbrPozSygcY:wd9GD17jvC4"img src="http://feeds.feedburner.com/~ff/taipan?d=wd9GD17jvC4" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=cgyHi49vu5I:gbrPozSygcY:l6gmwiTKsz0"img src="http://feeds.feedburner.com/~ff/taipan?d=l6gmwiTKsz0" border="0"/img/a /divimg src="http://feeds.feedburner.com/~r/taipan/~4/cgyHi49vu5I" height="1" width="1"/

This post is a guest contribution by Niels Jensen*, chief executive partner of London-based Absolute Return Partners.

As investors we are faced with the consequences of our decisions every single day; however, as my old mentor at Goldman Sachs frequently reminded me, in your life time, you won’t have to get more than a handful of key decisions correct - everything else is just noise. One of those defining moments came about in August 1979 when inflation was out of control and global stock markets were being punished. Paul Volcker was handed the keys to the executive office at the Fed. The rest is history.

Now, fast forward to July 2009 and we (and that includes you, dear reader!) are faced with another one of those “make or break” decisions which will effectively determine returns over the next many years. The

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Deflation and the price of Gold. Give yourself an extra point for spotting the trick question. It’s already tripping up plenty of would-be answers. Because gold must fall during deflation, since it rose so much during the inflation of the 1970s – right? “Gold Prices, in real inflation-adjusted terms, unsurprisingly tended to increase during inflationary times,” nods one commentator, writing in London but posted at the strong>Business Times in Singapore. “Its purchasing power tended to sag during depressions and deflation.”

The source for this claim? Besides syllogism (”The ’70s gave us inflation and a gold bull market; ergo, the opposite must be bad for gold…”) it was apparently Roy Jastram’s The Golden Constant, that dry, dusty study of gold’s enduring stability across the very, very long run by the end of which we will all be deader than disco.

First published by Wiley in 1977, The Golden Constant has

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We live in a global economy. And, unless we destroy the global economy that now exists the way the world destroyed the first global economy starting with the 1914 conflict and proceeding through the next fifty-five years or so, we will continue to face the duties and responsibilities of operating within a world economy. And, those duties and responsibilities begin with the currency of the country.

It is hard to have confidence that the United States accepts this fact.

I know that we are in a recession (depression?). I know that the immediate pressure on the Obama Administration is to “get the economy going again.” I know that the Treasury Department and the Federal Reserve, both dependent partners in the effort to get the financial system functioning, must provide whatever means it takes to avoid further deterioration of financial markets.

Still, there is a need to listen

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