What If?
"Every step that you takeCould be your biggest mistakeIt could bend or it could break But that's the risk that you take." —
Coldplay, "What If?"
"Two questions form the foundation of allnovels: 'What if?' and 'What next?'... Everynovel begins with the speculative question,What if 'X' happened? That's how you start."—
Tom Clancy
"There are known knowns: there are things we know that we know.There are known unknowns; that is to say, there are things that wenow know we don't know.But there are also unknown unknowns — there are things we donot know we don't know."—
Donald Rumsfeld, Fmr. US Secretary of Defense
"You see, the what ifs are as boundless as the stars."—
Sally Gardner, "Maggot Moon"
To learn more about Grant's new investment newsleer,
Bull's Eye Investor,
THINGS THAT MAKE YOU GO
Hmmm...
A walk around the fringes of nance
By Grant Williams
15 JULY 2013
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THINGS THAT MAKE YOU GO
Hmmm...
15 JULY 2013
Contents
Constitutional Crisis Pushes Portugal Closer to the Brink .......................................23Italy's Baretta Says Budget Crunch May Require More from Rich ..............................24"A Toxic System": Why Austerity Still Isn't Working in Greece ..................................25France Loses Top Credit Rating as Fitch Cites Lack of Growth .................................28The Sochi Olympics: Castles in the Sand ...........................................................29US "Disappointed" with China for Letting Edward Snowden Leave Hong Kong ...............31China Exports Slide Raises Doubts About Currency Policy .......................................32When the Cracks Appeared ..........................................................................33More on the German Gold Situation ................................................................35We Can't Wave Goodbye to the Euro Crisis Just Yet ..............................................36
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THINGS THAT MAKE YOU GO
Hmmm...
15 JULY 2013
ThingsThat Make You Go
Hmmm...
A few weeks ago, I put a chart with which I am acutely familiar up on my Bloomberg. It is achart I have studied every single day for over a decade, so by now I know pretty much everydip, every rally, and every sideways channel that makes up this particular pattern.I remember where I was when the big moves took place, and I recall with great clarity myvarying degrees of comprehension and incredulity over every meaningful change in direction.I have lived every Golden Cross and died every Death Cross, cheered every bottoming pattern,and despaired each time the chart patterns signaled a breakdown in an upward trend; butabove all, I have continued to remorselessly reassess my view of the investment case for thisparticular instrument, looking for signs — not evident in the charts — that would suggest it hadrun its course.As I stared at the chart again, almost absentmindedly,I put two vertical lines on it, one representing August17, 2011, and one that marked January 14, 2013; andsuddenly, a concept that had been gnawing away atme for a while crystallized in my mind as those twolines pulled in a whole bunch of known knowns, knownunknowns, and even a couple of unknown unknowns.It was a truly Rumsfeldian moment.By now, there is no doubt a distinct three-way splitamongst those who have made it all the way to thethird paragraph of this week's TTMYGH. There are some new readers who are wondering what
asset the chart reected, as well as many who are already rolling their eyes and muttering tothemselves "Really? Gold? AGAIN?" — and nally there are the overwhelming majority who havealready scrolled to the "...and nally" page, chuckled at the cartoon, and moved on to more
edifying fare.
Yes, it's one of those weeks when I must ask your indulgence while I ramble on about a subject
close to my heart that has recently been a source of great frustration. And yes, it's gold —particularly, the bizarre price action of the last six months, which has run counter to most
logical assumptions, given the various macro factors bringing inuence to bear on the yellow
metal.Cyprus should have been a hugely positive tailwind for gold. But it wasn't. The ongoing moneyprinting should have provided support for gold. But it hasn't. The talk of tapering should havehad a minor but noticeable effect on gold, given its healthy recent correction. But it didn't.Sustained data suggesting a voracious appetite for the physical metal not only in Asia but inWestern countries, too, should have led to a bounce on the COMEX. But it hasn't.
The whole thing is as bafing as Kim Kardashian's fame.
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