QBAMCO’s Paul Brodsky On ‘Gold Monetization And The Big Reset’

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Brodsky On “Gold Monetization And The Big Reset” (ZeroHedge, June 8, 2012):

Macroeconomic Problems

1) The global banking system is functionally insolvent and will fail without exogenous policy action*

  • There is one, interconnected global banking system linked by global financial markets and coordination among currency boards and central banks
  • In the current banking system model, debts due tomorrow are serviced by newly-incurred debts today (which create deposits)
  • Stagnant or declining nominal global asset prices since 2008 have stressed bank balance sheets
    • Loan book marks remain at substantial premiums to:
      • The present value of their cash flows in real terms
      • Liquidation prices at current or higher interest rates
  • Central bank easing and asset purchases to date have only tempered the rate of asset price declines
  • Current adversity among European banks directly impacts global commerce and finance

*Bank balance sheets can deleverage either via nominal write-downs of assets, (leading to outright failure/insolvency as tangible equity is extinguished), or through nominal increases in system reserves via base money inflation (provided by central banks as they expand their own balance sheets)

Read moreQBAMCO’s Paul Brodsky On ‘Gold Monetization And The Big Reset’

QBAMCO: ‘Another Perspective’ (Must-Read)

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Charlie Munger: Gold Is For Holocaust-Era Jewish Families To Sew Into Their Garments; Civilized People Don’t Buy Gold

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Must Read: “Another Perspective” (ZeroHedge, May 14, 2012):

From Paul Brodsky and Lee Quaintance of QBAMCO

Another Perspective (pdf)

Two weeks ago, before Jamie Dimon’s thoughtful diversion, Charlie Munger of Berkshire Hathaway instructed viewers of CNBC that “civilized people don’t buy gold, they invest in productive businesses”. Munger was right in that civilized people invest in productive businesses and was right to imply that gold is a non-productive rock, but, in our humble opinion, he was wrong to suggest that gold does not have significant upside as an investment currently (even more than BRK/A?).

Read moreQBAMCO: ‘Another Perspective’ (Must-Read)