John Paulson Has A Problem…
March 30, 2012
Energold Q4–Just Fine
April 18, 2012

YENd of an era….

A few weeks back, my good friends over at Capitalist Exploits did a very long and detailed piece on Japan. For anyone who is living in a cave, the Japanese Yen is about to begin a multi-decade bear market. Of course, one could have made the same arguments a few years back and been painfully early. However, I am increasingly starting to think that the top is in for the Yen. The structural problems are too great to overcome and the macro forces are increasingly swinging in the direction of a substantially lower Yen. I’ve been waiting for a bounce in the Yen to post this. Now that the Yen has rallied almost 5% from the recent lows, I think this piece is much more appropriate.

Of course, the Yen will be a trade much like gold—where every pullback is a chance to add to your position—put it on and max it out. Multi-decade trends do not simply end and reverse. There’s a lot of noise and volatility at the inflection point. There could still be some pain ahead if you are too big. However, current prices on the Yen feel like as good of a point as any to start a position.

Remember, that shorting the Yen has nothing to do with my take on Japan itself. I am a huge fan of the place. A lower Yen will only make travel cheaper and more enjoyable. It will also eventually help revive the export economy. All of these things will be good for the Japanese. It seems almost inevitable that the government will help this process along with aggressive JGB purchases.

With that out of the way, enjoy the report.

Categories: Current Investments
Positions Mentioned: none

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