December 3, 2017
December 3, 2017


I’m short the Yen by being long USDJPY & wow, this leverage is pretty crazy (I believe its 125 to 1). I’ve invested about 15k USD slowly getting long and already my current loss is nearly the same amount!! Luckily, this is long term capital & I plan on slowing adding to this position over the next several months. Any idea what its gonna take for JPY to cease being the “safe haven” when the markets get rocky? I mean, take a look at Kyle Bass’s work on Japan & the bearish nature of their economic predicament — the markets couldn’t be anymore wrong with this assumption.

I took a hit on USDJPY this week as well, but I’m not leveraged. I’m still looking for spots to add. Any time you do anything at 125 to 1, you’re asking for trouble. Leverage will always bite you when wrong. Be careful.

Like you have been looking to buy a house in metro nyc area, but prices have probably only fallen about 15% which based on my calculations prices should have fallen 30% from the peak.
I still do not understand why you favor buying real estate and you said you would buy in Miami.

My reasoning is yes mtg rates are low and we are in a treasury/interest rate bubble, but would not houses fall in price if mtg rates backed to more normailized rates say 6-7%?
If I bought a house how would a find a buyer to purchase it at the price I paid?
Still do not understand how your pretax income on property goes from $60k to $130K if bond market tanks.
I waited this bubble out for sometime and it is frustrating that the govt and the bamnksters are manipulating the housing market no foreclosures in the area, people living free for 3-4 years.

In an inflationary environment, if you can finance a hard asset at a very low interest rate and do it for 30 years, it’s pretty hard to lose money over that time. I have to agree with you that NYC home prices are not cheap. Neither are prices in Miami where I live–and still rent. I’ve been waiting 9 years now to buy something. I’m still waiting, but if the government takes interest rates low enough, suddenly it starts to make sense because you can finance it for just about nothing and then watch inflation do its thing…

Hi Harris,

As per usual, I am an avid reader of your posts and appreciate you sharing your ideas and insights as you trot the globe.  I have a question with respect to trust, which admittedly is a big issue for me when it comes to investment.  In particular, when it comes to people I don’t know (and don’t have any endorsement from a common connection) I find it very difficult to reconcile the risks associated with a relatively unknown potential business partner.  As you have experience in markets which in some cases would score very poorly on a corruption index and where business ethics greatly differ from North American standards, I would be very interested to hear your thoughts on how you deal with these risks?

Also, on another note I found this article pertaining to Mongolian banks’ exceptionally high interest rates, the possible reasons, and risks.  Perhaps you are familiar with it?


There’s no way to know if someone is trustworthy. Even generally good people do stupid and illegal things at times. Reputations are important and I trust the advice of friends. If you are in a funny country where you don’t know people, naturally it is harder. However, I tend to find that if you spend 2 weeks in a country, eventually, everyone starts to talk about who’s doing what. People take some time to open up to you, then they’re a gusher of information. If someone isn’t trusted by the local businessmen, then you will figure it out quickly. Also, try to meet the people involved. Everyone has a few friends who are amazingly perceptive about people, even if they don’t understand the business lingo. Bring them along with you. When in doubt, most women seem to instantly zero in on the ‘bad guys’.

On Mongolian bank rates, they’re very high and recently have been going higher with some banks quoting almost 20% on a 1 year CD. This is being caused by the central bank trying to slow loan growth and economic growth so that Mongolia doesn’t “overheat.” The problem they have is that if most business ideas have returns on capital of over 30%, borrowing at 25% is still profitable to grow your business. Even real estate construction here (a huge piece of total bank lending) has a 2 or 3 year payback on construction cost through leasing, or an almost instantaneous double if you sell off residential units. I think you will need higher rates to really slow down the growth here, which is still accelerating even as the central bank continus to raise rates. That said, high rates and rapidly increasing reserve requirements are forcing many banks to curtail new lending and reduce loan books. It’s funny to see the banking sector reduce loan books even while the GDP is growing around 1% a week. I don’t know if that has ever happened before in a growing economy.

Hi Kuppy – thanks for offering such interesting and educational articles. Ever get worried that your news sources are too similar? I’ve noticed a lot of information from you, Fleck, interviews on King World News, and Capitalist Exploits, have some very similar opinions. I was wondering who you recommend reading for a different perspective. i.e. someone smart & thought provoking, who might not agree with you on some of your major theses. Thanks!

Great question!! I worry about this a lot. The problem is that I haven’t found many people with opposing views who I really understand economics. What am I going to do? Read Paul Krugman? lol

Take a few strong views I have like gold going higher, even the bears on gold only think that it’s gone up a lot and is due for a pullback or consolidation for a few years (can’t argue too hard with that). Do you know of anyone that thinks it’s going below 1000 and staying there? I cannot find a single person who thinks that. Do you know of anyone who doesn’t think that most developed economies are bankrupt? I just find so many of the world’s problems to be so obvious and so easy to predict by examining history that most educated people tend to agree with me to varying degrees. There are disagreements on what to buy and when. I even argue with Fleck about things like silver which i think will still go lower before higher. However, we both think higher in 10 years…

I would love to have a well thought out thesis for why precious metals should go down, for why developed economies can balance their budgets and not be forced to embark on inflationary policies, for almost anything. I just haven’t found many good counter-points, but not for lack of searching. Almost the only counter-point I can find for these overriding macro themes is that most governments are so partisan and so prone to bickering that they may delay their inflationary stimulus plans (QE3, LTRO2, Etc.) until the problems are even worse. But that only means that the ultimate response will be even larger in magnitude. So in conclusion, I find people who differ on timining and on what exactly to play, but very few well thought out cases for directly opposite views. I’d love if readers sent me things that do contradict what I’m writing and I’ll print them for other readers.

When it comes to individual investments like NBSK, there are enough guys disagreeing with me that it’s easy to have a well thought out dialogue with them and test the thesis–but i see that as being different as it’s a subset of a much larger macro theme.

Kuppy-Have you considered taking a position in NUGT (3x GDX) as a way of avoiding problems with specific companies in the mining industry?

I hate leveraged ETFs as they have massive tracking error.

Hi Kuppy.

This seems telling to me.
On Wed, 23-MAY-12, Dow Jones reports, “Mercer International Cut To Hold From Buy By Canaccord Genuity.” Stock gaps down on the open to around $6 and was bought all day. By 11:30 am MERC was flat and the markets were tanking over 1%, SPX bottomed on Wed around 12:30pm.

Thank you stock analyst for bringing out buyer(s). I wonder what Mr. Peter Kellog is doing?
Now, no real follow through on Thursday to close above $6.80. But at what I see from the charts is a stock that is bottoming (biggest trading volume is on up days, too) and during really negative overall market backdrop.

Thanks again for this site and sharing your insights.

Hope you are rights… I own a bunch.

Hi Kuppy,

First glance at EGD’s press release. The only knocks on this quarter that I see is that it appears the Bertram earn-outs crush the bottom line of the energy business, and make me wonder if Bertram/energy division will add to Total earnings or detract from Total earnings through all of 2014 as it did in this first quarter of 2012? Only using the simple arithmetic (too simple?)in the press release show the earn-outs of $6.6M causing a loss $1.1M on revenues of $25.4M. And from the press release it looks like this will continue through 2012, 2013, and 2014.

After 2014 with decades of work in Alberta ahead, then bottom line profits in the energy division begin and will be quite huge, e.g., revenues of $25.4M and a profit of $5.5 (add $6.6M earn-out to the loss of $1.1M) which is 20% bottom line margin.

I think you have a pretty good understanding of the situation. Fred is looking at the long term, at the cost of short term earnings. Unfortunately, this is a market (canada) where guys don’t think very long term most of the time….

As a guy on the ground in Mongolia, what’s your take on IVN as these prices?

I sort of think it’s cheap, but will likely just go lower until Rio buys the half that they don’t own….