Friday, September 16, 2011

Trump Takes Gold Deposit In Signal To Ignorant Followers

Donald Trump likes PR that burnishes his image as a savvy guy on the cutting edge.  He's sort of joining the gold party by letting slip that he took gold bullion as a deposit from a tenant instead of cash.  I say "sort of" because I can't imagine The Donald ever going whole hog into the gold camp.  His real estate holdings are undoubtedly benefiting from the Fed's ZIRP focus.  Any rise in interest rates would put his heavily-leveraged properties seriously underwater and make loans for further development prohibitively expensive.  Taking a gold deposit from a precious metals dealer is good PR for the new tenant too.  Trump threw them a bone that didn't cost him anything extra. 

Gold is the hot asset class now, so Trump's leap onto its bandwagon means that the aspirational, wanna-be, know-nothing, Robert Kiyosaki-reading, suburban NASCAR dad, part-time real estate mini-mogul who bought a duplex last year and plans to flip it this year is going to start buying bullion.  That crowd can't scrape up enough cash for a 32-oz. bar but that's okay.  They'll be rushing on down to the corner pawn shop to drop cash on spare gold teeth and earrings that aren't acceptable as currency at your local grocery store.  I hope they really go for it.  They'll make it easier for me to reduce my GDX holdings at record high prices and build the cash pile I'll use to buy the real estate they won't need after they're bankrupt. 

Full disclosure:  Long GDX with covered calls.