My views are being stolen??

Ok, not really, just a catchy title to the post. But my views on gold have been reaffirmed by none other than Jim Sinclair, chairman at Tanzanian Royalty Exploration (who BTW is one of the most informed individuals when it comes to gold)

"According to Jim Sinclair, chairman at Tanzanian Royalty Exploration, the price of the yellow metal could reach as high as $1650 by the end of 2010 and moving into the beginning of 2011. But, the man admits that, given recent happenings, this could be a bit of a low estimate."

full article on mineweb. http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=93428&sn=Detail

Negative Interest Rates Again!!

Regular readers will recall that I had posted about this unheard of phenomenon in past as well. This time it's "window dressing" by banks that is to be blamed for not only free but actually profitable borrowing by US govt.

From FT:

Short-term US interest rates turned negative on Thursday as banks frantically stockpiled government securities in order to polish their balance sheets for the end of the year.
On Thursday, Treasury bills maturing in January traded below zero per cent, traders said. Three-month bills traded at 1 basis point and six-month bills fell to a record low of 13bp – compared with 14bp at the height of the crisis last year.
Investors looking for some return piled into two-year notes, driving their yield down to 0.68 per cent, a year low

http://www.ft.com/cms/s/0/38f71676-d56a-11de-81ee-00144feabdc0.html

Gold at $800 or $1500 ??

A lot of people have been asking this question of late. I hear that Marc Faber has recently said that gold will move down to US$800 in the short term. However if I look at gold from a 1 yr perspective, I believe gold is headed up all the way to about $1300-1500. the reasons are many but biggest of all is the dual pressure of falling dollar and a move towards reserves other than dollar by most central bankers around the world. a recent IMF paper has this very interesting graph



The fact that US$ share of reserves has been falling can be seen but what is heard now is an indication that not only is the share falling, its falling faster than it did in the past. Recently RBI also bought a large chunk (US$200 bn worth) of gold to replace the dollar reserve. And increasingly all the national reserves that are loosing dollars and searching for alternatives, will find it in precious metals (mostly gold).

Hence I am a big bull on Gold

One of the best songs

I usually don't analyze music as I believe there are some things that should simply be enjoyed. but given how much I like this song I couldn't help but ask why do I like this one so much?

The song I am talking about is 'Aj din Chadeya' in the movie 'love aajkal'. This song, I have realized, is liked so much by me because it is a perfect package of everything.

The rhythm is undoubtedly amazing, hats off to Pritam Chakraborty, but it is complemented perfectly by the really soothing voice of Rahat Fateh Ali Khan and the really touching lyrics by Irshad Kamil.

So you see, this song is an amazing blend of perfectly complementing music, lyrics and voice. All three are individually enough to make a very good song on their own and they have come together in this song. No wonder I am such a big fan of this.

Be careful, your bank statement may not be correct

It was recently reported by Wired that a new technique employed by cyber criminals actually changes your bank statement to hide the fraudulent transfers from your bank account, this means that potentially you may be out of money for long enough and not know about it if you rely solely on your online statement and dont transact too much

link: http://www.wired.com/threatlevel/2009/09/rogue-bank-statements

This is the most troubling article I have read this weekend.

Every regulator should read this

http://generationbubble.com/2009/10/03/dupe-deluxe-the-suckers-market-for-financial-innovation/

Unless regulators play a role in this game, the outcome as defined cannot be changed

CRISIL Concall:-

Ok, I got in late but had the opportunity to hear the Q&A round.... so here goes

after a little bit of ada..beep..ada..boop.. Tarun says Crisil is now more confident that govt. will infulse cash into PSU banks if need be so they are now more comfortable with the banks. and hence upgrades eight public sector banks. UBI and BOI are now AAA for Tier I, Hybrid and lower Tier II bonds. I guess the market would have (or atleast should have) thaken this into account quite some time back.

As Aside: S&P did something amazing and unbelievable

From Blooomberg:
Standard & Poor’s backtracked on ratings cuts issued last week and raised the ranking on commercial mortgage-backed debt from three bonds sold in 2007.

The securities, restored to top-ranked status, had been downgraded as recently as last week, making them ineligible for the Federal Reserve’s Term Asset-Backed Securities Loan Facility to jumpstart lending.

S&P lowered the ratings on a class of a commercial mortgage-backed bond offering from AAA to BBB-, the lowest investment-grade ranking, on July 14. The New York-based rating company reversed the cut today, S&P said in a statement. In a related report, S&P said it adjusted assumptions on the timing of projected losses on the mortgages.

“It is a stunning reversal and certainly raises questions concerning the robustness of their revised model,” said Christopher Sullivan, chief investment officer at United Nations Federal Credit Union in New York. “It may engender further uncertainty with respect to ratings outlooks.”

Links

The Unwisdom of Crowds: A very thought provoking article on Financial panics:
http://www.weeklystandard.com/Content/Public/Articles/000/000/015/921taekw.asp

Charlie Munger on THE PSYCHOLOGY OF HUMAN MISJUDGMENT:
http://vinvesting.com/docs/munger/human_misjudgement.html

The Hindu Rate Of Wrath

When the Mahatma's cowards erupt in fury, it hurts. It isn't terror.

Francois Gautier

I

Courtesy -Outlook

---

s there such a thing as 'Hindu terrorism', as the arrest of Sadhvi Pragya Singh Thakur for the recent Malegaon blasts may tend to prove? Well, I guess I was asked to write this column because I am one of that rare breed of foreign correspondents—a lover of Hindus! A born Frenchman, Catholic-educated and non-Hindu, I do hope I'll be given some credit for my opinions, which are not the product of my parents' ideas, my education or my atavism, but garnered from 25 years of reporting in South Asia (for Le Journal de Geneve and Le Figaro).

In the early 1980s, when I started freelancing in south India, doing photo features on kalaripayattu, the Ayyappa festival, or the Ayyanars, I slowly realised that the genius of this country lies in its Hindu ethos, in the true spirituality behind Hinduism. The average Hindu you meet in a million villages possesses this simple, innate spirituality and accepts your diversity, whether you are Christian or Muslim, Jain or Arab, French or Chinese. It is this Hinduness that makes the Indian Christian different from, say, a French Christian, or the Indian Muslim unlike a Saudi Muslim. I also learnt that Hindus not only believed that the divine could manifest itself at different times, under different names, using different scriptures (not to mention the wonderful avatar concept, the perfect answer to 21st century religious strife) but that they had also given refuge to persecuted minorities from across the world—Syrian Christians, Parsis, Jews, Armenians, and today, Tibetans. In 3,500 years of existence, Hindus have never militarily invaded another country, never tried to impose their religion on others by force or induced conversions.

You cannot find anybody less fundamentalist than a Hindu in the world and it saddens me when I see the Indian and western press equating terrorist groups like SIMI, which blow up innocent civilians, with ordinary, angry Hindus who burn churches without killing anybody. We know also that most of these communal incidents often involve persons from the same groups—often Dalits and tribals—some of who have converted to Christianity and others not.

However reprehensible the destruction of Babri Masjid, no Muslim was killed in the process; compare this to the 'vengeance' bombings of 1993 in Bombay, which wiped out hundreds of innocents, mostly Hindus. Yet the Babri Masjid destruction is often described by journalists as the more horrible act of the two. We also remember how Sharad Pawar, when he was chief minister of Maharashtra in 1993, lied about a bomb that was supposed to have gone off in a Muslim locality of Bombay.

I have never been politically correct, but have always written what I have discovered while reporting. Let me then be straightforward about this so-called Hindu terror. Hindus, since the first Arab invasions, have been at the receiving end of terrorism, whether it was by Timur, who killed 1,00,000 Hindus in a single day in 1399, or by the Portuguese Inquisition which crucified Brahmins in Goa. Today, Hindus are still being targeted: there were one million Hindus in the Kashmir valley in 1900; only a few hundred remain, the rest having fled in terror. Blasts after blasts have killed hundreds of innocent Hindus all over India in the last four years. Hindus, the overwhelming majority community of this country, are being made fun of, are despised, are deprived of the most basic facilities for one of their most sacred pilgrimages in Amarnath while their government heavily sponsors the Haj. They see their brothers and sisters converted to Christianity through inducements and financial traps, see a harmless 84-year-old swami and a sadhvi brutally murdered. Their gods are blasphemed.

So sometimes, enough is enough.At some point, after years or even centuries of submitting like sheep to slaughter, Hindus—whom the Mahatma once gently called cowards—erupt in uncontrolled fury. And it hurts badly. It happened in Gujarat. It happened in Jammu, then in Kandhamal, Mangalore, and Malegaon. It may happen again elsewhere. What should be understood is that this is a spontaneous revolution on the ground, by ordinary Hindus, without any planning from the political leadership. Therefore, the BJP, instead of acting embarrassed, should not disown those who choose other means to let their anguished voices be heard.

There are about a billion Hindus, one in every six persons on this planet. They form one of the most successful, law-abiding and integrated communities in the world today. Can you call them terrorists?

Conspiracy Theory and all that

Some of the analysts have lately been talking  about the loses that India inc. will take on its books this quarter due to huge MTM losses on their derivative positions. This, they claim, will cause a drop in reported earnings for majority of the companies for the first time in many quarters. While the logic seems to be fine there is one problem that I foresee. As pointed out by Andy Mukherjee in his article the Indian accounting rules are not yet clear on the MTM side so its not clear how many companies will actually end up reporting the true picture of their losses.

 According to Jamal Mecklai, chief executive officer of Mumbai-based risk- management consulting firm Mecklai Financial, this month that Indian companies may have as much as $5 billion in marked-to- market losses on their currency positions.

Even so, as Mecklai noted in an interview posted on the Web site moneycontrol.com, Indian accounting norms don't require companies to mark these positions to market.

That means that bets that have turned unprofitable because of the U.S. currency's recent slide -- to a record against the euro last week and to a 12-year low against the Japanese yen -- may remain hidden from scrutiny until the contracts mature and the losses are realized.

This gives rise to a separate conspiracy theory. If the company intends not to disclose its losses this quarter (and I can give umpteen numbers of reasons for them not wanting to do that) then maybe they won't take their banks to court for the fear of disclosing how much they are slated to loose over bets they took on cross currency derivatives. There may be many who had no business taking these positions in the first place and who will now be more concerned about disclosure than loss.