Joi de vivre – Paris

In Norway the left-green coalition won the election and are up for another four years in charge. Somewhat liberal Venstre got almost wiped out and conservative Høyre did bad, but better than feared. What sets Norway apart is the amazing success of Fremskrittspartiet FRP. FrP got one out of every four votes, quite amazing. What is this creature? They have never been in power. They are build on opposition and opportunism. Their party program from the late 80ties is astoundingly libertarian when you read it as is. Yet, FrP at the core, at the spine is an opportunist party. They have made opportunism into an art form. The feat of FrP is impressive, but we are still rather cold about the phenomenon. Should they ever get into power, most likely a Høyre-FrP coalition in 2013 we will see their true face and they will be set back dramatically. As you will know, we do not believe in the political process anymore.

Gold is now trading at 1015 and might hold up over 1000 this time, we think so, but we have thought so several times before. We thought the magical USD 1000 would be magical, significant in some way. But the wiggling around 1000 has made us disillusioned about even this. USD 1000 is just a price, just a price as any other price, in Yuan it’s about 7500 – means nothing.

US bond yields are holding low, so it seems gold is heading higher not on inflation worries. The stock market is up, so it’s not fear either. What is it then? Someone is buying. Our guess is the Chinese. If this is right they have the money to buy a lot more. In fact, if we were the Chinese we would attempt to corner the gold market. They can probably do it, not just because they have the money to it, but also because they can restrain the FED from emptying Fort Knox gold into the market. The Chinese could buy up all forward contracts, buy options on gold miners, for a few hundred billion. Then they could announce that they thought the real price of gold should be USD 6000, and that they would support a move up to 6000 with another few hundred billion. They could make a trillion dollars or more on this, must be tempting.

In fact, since the Hunt brothers failed at cornering the silver market no one seems to talk about cornering any market anymore, it was in fashion in the 70ties. It is the false belief in perfect markets that can’t be cornered. Our contrarian spine therefore tells us that a spectacular corner might be just around the corner. Any market could be cornered as we see it, gold, silver, copper, oil, oil tanker transport, or any one of the derivatives markets. Watch out for this.

We are still in Paris, wonderful place. It’s detached from reality in so many ways. Food related stuff on every corner, in Norway and the U.K. there are still real estate agents in every corner. We love France, but it is a place for living, not for working or getting things done. Hmmmm, makes us think is we are to focused on working and getting things done – who will care what we do in a hundred years. Live now.

Vive la France! Joi the vivre!

September 16. 2009
Paris, France
Hans Jorgen Lysglimt

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