Wednesday, September 24, 2003
Chainsaw Jim is Back For More!
Author: Jim Sinclair
You probably know already that every once and a while I get a bee in my noggin and I have to do something.
Well that bee has been telling me that the next big profit after this great “knock'em sock'em” run up in gold from $342 is in the long bond.
My only concern is that too many pros may get too short too soon. You know that money managers are like a sea of madmen reacting to the same stimuli. The stock market takes a hit and the automatic answer is bonds.
The combination of those two points makes positioning for a wild 2nd flop in bonds the job of a master trader. Now where are you Bert & Jesse when we need you? Just as I accumulated a quite substantial position in the December $350, $360 & $370 Comex gold calls when gold was in the $340s, I intend to do likewise in the 30 year bond Puts for December and further out.
I know this will not be easy but it will be profitable. Such a trade is clearly not for the faint of heart. But for the few with an iron will, a taste for the dangerous, and a willingness to hold, hold, hold and hold off before you roll the dice in a significant way, this could be fun.
Yes, I already own a few Put options but nothing yet of significance. I have them out because I like pain. That is not what you should do but to me having a small commitment keeps my attention on the ball.
Here is a quote concerning the results of the Dubai "conclave of the hired" that was circulated this morning to the key private banking clients of a major establishment international investment firm:
“In the wake of Dubai, there is little for the markets to get to grip with right now in terms of major market moving data or event, other than the latest G7 machinations on the dollar. Just as much as 1985’s infamous Plaza Accord left a lingering impression on financial markets for years, the Dubai Deal will have an enduring spill over effect for markets. Future expectations about the dollar have been roundly downgraded. The market now perceives the Bush Administration embarking on a high-risk strategy to lower the dollar’s value against the Asian currencies, to help jump-start the economy and boost labor market recovery ahead of next year’s US election. It could well back-fire.”
That was written for the biggest and best clients of a brand name international investment banking firm that you would least expect to utter such a thing. The break in the market today was not a product of OPEC but of a market looking for a reason to break.
These words are, IMO, extremely positive for gold and eventually must be translated into the long end of the bond curve by driving the 30 year bond to the recent lows as the dollar plumbs new lows which it certainly will.
