This won’t come as a surprise to most educated investors, but Greece is in near collapse, the US is pumping dollars into a system that needs jobs more than money, and the top 1% of our country’s population is enriching themselves while the rest of us wonder where the next “bubble” is going to come from.
Those are some of the “known” economic elements. The newest revelation, the latest “unknown”, is this news from Wall Street: Goldman Sachs, the holiest of holies, the giant vampire squid on the face of American capitalism, (to quote Rolling Stone writer Matt Taibbi) is planning to offer NO BONUSES this quarter. I’ll pause for a moment while you let that sink in.
NO BONUSES. – Think about it: can you imagine how difficult it must be to continue to light your imported Cuban cigars with $100 bills when you’re forced to use those very same bills, not as an ignition source for your stogie, but instead to pay for things like Junior’s pre-school tuition and shots for the pure-bred Tibetan Mastiff? How’s a millionaire supposed to make ends meet without a BONUS?? It’s clearly a sign of the end of the world as THEY know it. But Goldman Sachs and the rest of Wall Street haven’t operated in our world for years. Goldman has for years, stood above it all and looked down in contempt at the poor (and the only slightly rich). But not this quarter.
Sadly, this quarter has seen the closing of the Alpha Fund. That’s the firm’s much-heralded 1.6 billion dollar hedge fund based on computer trading strategies. In addition, their closing stock price on September 21st was under $100 for the first time since 2009. It’s a sign that not all is well at the famed investment-turned-commercial-bank-when-they-discovered-they-could-receive-TARP-money-if-they-became-a-commercial-bank-overnight bank.
Fighting off what essentially became a run on the fund, Goldman closed the door on the Alpha Fund due to “redemptions.” Which is another way of saying, “We lost our clients a ton of money, so they began to worry and took their money from us. They took it away in such huge numbers that we had to close the fund or we’d go under.” Closed due to “redemptions” sounds SO much better.
So I leave you with this thought. Being cash rich right now and having liquidity is the best place to be. Liquidity equals flexibility. In this little corner of the world, Houston TX 77019 , you can sell your gold jewelry and use that money for other purposes or sell your silver jewelry and invest in bullion. But the smart plays are ones that create flexibility. Selling gold for cash may seem like a strange play, but when Goldman Sachs is essentially in charge of the economy and THEY don’t get a bonus, you better hold on to your hat.