A few weeks ago, I laid out my thesis on how rising costs are going to create structural headwinds for corporate profitability going forward.  Jeff Matthews reinforces this argument by noting that China's one-child policy is fast creating a shortage of labour.

Early in the week, it appeared to me that gold was topping out, at least in the short term, so I liquidated most of my GLD calls.  I blew out the rest on Thursday after the $35 plunge.  I have long-term positions that I have not touched.  I will look to re-establish positions in GLD calls in the future.

Paul Kedrosky has an excellent post on gold being underowned compared to the last big financial crisis.

This is an excellent post from China Financial Markets.  The abridged version is

I am from the province of Saskatchewan.  Wonderful place, if you can handle weeks on end of -40C in the winter.  People are lovely.  Friendly too.

Unfortunately, they now have too much money.

I'm not sure if this is a good or bad thing, considering how awful the economists who run central banks were at selling their positions for most of the past 10+ years or so.  Having said that, central banks will provide a leg underneath the gold market for at least the intermediate term.  From the FT.

I have updated the investment book log.  These are the official recommended books of Running of the Bulls, a highly coveted distinction in the world of business publishing,** sorted by general category.

Accounting

Financial Shenanigans

From Real Time Economics

“I don’t fully understand movements in the gold price,” Mr. Bernanke admitted.

Awesome.

I have had several conversations with investment professionals over the past few days regarding gold.  I have been asked by people in the investment business what they should do with their money, given the low prospective returns for most asset classes.  I ask them if they are invested in the pretty much the only bull market going, gold?  The response?  Skepticism.  All but one said "No." They don't get it, they tell me.  I tell them that it is much easier to make money in a bull market than in a bear market, but no dice.  They have no interest.

From FT Alphaville.