Jim Sinclair’s Commentary
Add this billionaire to the list of “gold bugs”!
Billionaire Crispin Odey, Who’s Had A Pretty Terrible Year, Is Betting Everything On Gold
August 13, 2016
It has been a violently turbulent year for bearish British billionaire (actually, as of April, he is no longer a member of the three comma club), Crispin Odey, whose hedge fund has plunged 29.9% YTD, following a 21% drop in 2015.
That’s the bad news. The good news is that the fund, which has a Sharpe ratio that will need a very big chart, was only down 4% in July when global central bank intervention went into overdrive.
Which brings us to Odey’s current investing mindset, and what he believes is the best trade for the future. Needless to say, with a gross notional allocation of 86% of his entire AUM, Odey is rather convinced that it is all about gold.
Here’s why Odey is betting it all on gold, from his latest investor letter:
There are some signs of exhaustion in the demand for gold and silver at present. The net speculative position is greater than normal and suddenly with the USA posting a higher than expected 255,000 additional new entrants to the workforce, the markets are hopeful that there will be a rate hike in September in the USA and the US dollar’s weakness might be over. Optimists are now going for a 3.8% third quarter rise in real GNP over there.
To be fair, we were wrong footed. All the sevices data out of the USA pointed to a weaker number. The second quarter GNP figure which had widely been expected to come in at +2.8% turned out to be only +1.2%. With capital spending following profits downwards and the world economy continuing to be weak, only consumer spending and bank consumer credit lending kept things going.
It is indeed ironic that the USA accuses China of growing only thanks to consumer spending and debt, when the USA is pursuing exactly the same policies. US banks in the second quarter grew their lending by 8.5% annualised, or by nearly 24% of GNP, which is following on from growing their lending by 11% last year, or nearly 30% of US GNP.