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9/28/17

The best Paulson feedback...

...comes from A. Person, who must remain anonymous but is fairly described as an investment professional. Not only do I agree 100% with this mail, it's also the type of eloquence I would like to achieve when I grow up. The mail has been edited very slightly to smooth grammar, its meaning has not changed a jot.


We don’t have the best regard for Paulson. I’m not sure if many do these days. I don’t think they have a clue what they’re doing in mining, equally I don’t really think that was their main intention. My understanding is that Paulson wanted to make a leveraged bet on U.S. inflation, so he put a chunk of money into big, out-the-money monster assets. In fairness Buffett thought the same inflation response would happen, but apparently he knew better than to invest in gold mining companies.

Maybe in the process Paulson realised the hard way that the industry is a big dirty casino scam whose primary function is to take other people’s risk capital and find ways to stuff it into their pockets with their left hand while waving their “hot table” flag with their right. Everybody's playing the same game, the buy side, the sell side, the companies, it’s one of the few industries where all those parties are aligned. They’re all quietly jerking each other off under the table so nobody has any incentive to stand up. I find it hilarious that Paulson found out the hard way that he had stumbled into the centre of an orgy, but it also appears to have made him angry. And that’s where things change, because now he’s motivated to rip off the tablecloth and God bless him, because I hate the mining industry circlejerk. Anybody with a brand name and a large pool of active capital who wants to throw their weight behind that cause has my endless blessing and support.

He’ll soon meet the other side of the mining industry though, It’s a clubby, defensive bunch who all feel very special and important, even though most of them wound up with their degrees because they didn’t have the grades to get into the more prestigious science/engineering programs, so people coming in and pointing out the obvious reflects badly on them as a whole. So they’ll scream in defiance that the world is flat, or say the world may not be flat, but you will never be the one to tell us so. Nobody likes it when somebody tries to raise the bar, morally, intellectually, structurally, whatever. Right now everybody gets paid to jerk off, imagine if they actually had to earn it through an accountable process!