Thursday, September 23, 2010

Jim Chanos on Gold

Last night on Wall Street, CNBC held a launch party for John Carney's new CNBC web site Net Net with John Carney.

John drew quite a crowd of well wishers. The notorious short-seller Jim Chanos was there. I'm going to be in NYC for most of the next couple of weeks, through a combination of private meetings and a conference or two, I should be running into quite a few heavy hitters. And I'm trying to program myself to remember to ask about gold. I really want to get a sense for how strong the attitude is on the Street for it.

I asked Chanos and he told me he had no opinion on gold. I pushed him a little further and asked him what he may have heard about gold from other traders. He said he wasn't talking to anyone about gold.

This doesn't give me much on gold, but it does set a bit of a boundary. It tells me that not everyone on the Street is talking about gold. But it also tells me that nothing about the recent move in gold has caught the attention of Chanos, so that he thinks he should be looking at it as a short.

Most everyone else I talked to among the money manager set seemed to be holding gold or about to buy some. Only one, shall we say very seasoned broker, gave me a funny look when I brought up gold to her--the kind of look I would have gotten from almost everyone just five years ago. She said, "Yeah, it's around $1,000." Since it's closer to $1,300, it told me she wasn't watching gold very closely at all.

A number of money mangers told me they have sell stops around $1,200, which supports my contention that a lot of the new buying is not the same as the buying from goldbugs, who have a very sophisticated understanding of gold relative to potential inflation. With money managers with tight stops, at some point, a down draft in the price of gold will occur that will take these guys out before the uptrend in gold continues.

I asked one money manager, who has one of the tight stops and bought gold at $800, why he bought gold in the first place, he gave me a one word answer, "Obama." He then amplifed, "I figured he would create the fear and confusion he has."

Beyond the money managers, there was a full mix of people at the launch. Henry Blodgett's Business Insider blogging machine Joe Weisenthal was there. I hope, for Henry's sake, that Henry has given Weisenthal an equity stake in BI, it looked to me that it was a bunch of BI competitors lined up to talk to Weisenthal.

No comments:

Post a Comment