Sold it all.
Same with the gold stocks.
Sold them all.
On Wall Street, what we do know is that the billion dollar man, John Paulson has been loading up on gold.
"Paulson & Co., the hedge-fund firm run by billionaire John Paulson, increased its investment in gold and gold-mining shares in the first quarter, according to a regulatory filing. As of the end of the first quarter, Paulson was the largest holder of SPDR Gold Trust, an investment fund that buys gold bullion. The New York-based firm owned 8.7 percent of the fund, valued at $2.8 billion as of March 31, according to a filing with the U.S. Securities and Exchange Commission.
That position was established as a hedge, the company said in a statement, because its funds have a share class that is denominated in gold rather than in dollars or euros.
Paulson bought or added to several gold companies in the quarter as well. He purchased a 15 percent stake in Market Vectors Gold Miners ETF, a fund that mirrors the move in the Amex Gold Miners Index. That stake was worth $638 million at the end of the quarter.
Paulson also bought a 2.6 percent of Gold Fields Ltd., becoming the fourth-largest holder of the Johannesburg-based gold miner. The investment firm, which manages $26 billion, also bought an additional 2.4 million shares of Kinross Gold Corp. Paulson owned 4.4 percent of the Toronto-based gold producer and was its third-largest holder at the end of the quarter.
Paulson reported owning an 11.3 percent stake in AngloGold Ashanti Ltd., also based in Johannesburg, in March. (That's another billion and a half)
Paulson’s largest fund, the Advantage Plus Fund Ltd. returned 4.8 percent through April."
We also know that David Einhorn has been gobbling up gold, and he touted it in his speech the other night.
He also touted gold in a shareholder letter:
"To everyone's dismay, we believe that some of Grandpa Ben's predictions are playing out. Our current chairman of the Federal Reserve, Ben Bernanke, is an 'inflationist.' ... The size of the Fed's balance sheet is exploding and the currency is being debased... Our instinct is that gold will do good either way; deflation will lead to further steps to debase the currency, while inflation speaks for itself. We have bought gold, calls on gold, an index of gold mining stocks (GDX) and calls on higher long-term U.S. interest rates."
And we also know that a bunch of technical analysts now say that gold is ready to break out.
So I got rid of mine.
Every ounce, and every share.
I don't buy the story that gold is a hedge against inflation. I think it was a hedge against "deflation." Look who has been buying gold. Isn't it the end of the world types?
And inflation, in things we don't own, is now back. (Did anyone see that MT was able to push through a price increase in steel? How do the deflationistas explain that? They should buy MT instead!)
Now for balance, I had to include what the supposedly "smartest guys in the room" were doing, so I would be able to make a point, without quoting the nut jobs. Heck, I think we're heading into a massive economic boom, so why should I bring any more crazy talk into this blog already!
Because the hedge, against inflation, is not gold, but oil. (See the post below.)
And in an economic boom, our dollar rallies, and our interest rates go up, and that isn't a hospitable environment for gold.
The last time I sold any gold was in December 1999, when gold had made a move off of it's bottom of 252 up to around $320. I was buying a condo overlooking the ocean in Florida, so I sold some Pan Pac $50 commemoratives, and some kilo bars to pay for the trade. And it's tough parting with gold. When it's in your hand, you know it's money.
For three years, I didn't have to sweat a lookback on gold. Then in five years, they both tripled.
I think you'll have plenty of time to get in gold again, and the cheapest assets here in the US are Florida condos and stocks.
After all, PIMCO's Bill Gross came on CNBC today, and warned viewers that we were heading for substandard equity returns for years to come. (He didn't mention that the commodity trade by the indexers is now back on again either.)
So it's time again to put the money in something that the "smartest guys in the room" aren't buying, and selling what they are.
And if you want something to buy outside the United States, you can start with Arcelor Mittal (MT 33.30), instead of parking your gold in Luxembourg!