Gold for JGBs

[valuecfa]

Seems an action of desperation to me.

 

http://www.bloomberg.com/news/2011-12-06/japan-offers-gold-coins-to-bond-buyers.html

[valuecfa]

First they give away gold for JGBs, now they change the way they calculate their GDP (gotta bump that denominator a bit). Will this buy them additional time? To me, these moves suggest just how worried they are getting that the endgame is near.

 

http://www.xe.com/news/2011/12/07/2332133.htm?utm_source=RSS&utm_medium=TL&utm_content=NOGEO&utm_campaign=News_RSS_Art9

 

Disclosure: Short Japanese credit

[Cardboard]

Valuecfa,

 

Well at least, the bond buyer will be left with something valuable other than toilet paper when it is all said and done.  ::)

 

I have been looking at this for a long time, but I have not done it yet, nor found the instrument that I like.

 

What are you shorting exactly? Bass said that he is not using CDS for the Japanese situation. Have you read somewhere what he may be using?

 

Cardboard

[sdev]

He's using options I believe. The volatility of JGB's that price the options is obviously extremely low at the moment. Therefore tiny options (tails) are extremely cheap and probably will stay extremely cheap until rates move. I'm sure you can get tremendous leverage buying options on JGBs if you have a dealer that will trade them with you. I haven't done much legwork but I don't know of a retail option.

[valuecfa]

I simply use futures. We have a pooled fund, so don't have difficulty meeting the hurdle.

[valuecfa]

Coincidently they came out with exchange traded ETN versions of a short futures JGB for retail investors. Though you might want to buy a DB put if you considered them.

[Josh4580]

Valuecfa, whats the symbol on that ETN?

[valuecfa]

Valuecfa, whats the symbol on that ETN?

 

The only two retail products i am  aware of are JGBS and JGBD.