Ladies and gentlemen, rest assured that I do not read the British lifestyle magazine Trader Monthly on a regular basis. Imagine a combination of Forbes, Stuff, and GQ and you can probably imagine its contents. While visiting a rather well-to-do relative, however, I came across this particular magazine. Something that caught my attention among the endless articles about shorting housing stocks, £40,000 wristwatches, and £3,000 power suits [what, there are women traders?] was a 2007 Bonus Survey projecting "average compensation levels for top-performing trading professionals at major banks globally, based on the best information available." The results, while unsurprising, are interesting for a number of reasons.
Let's begin with the new dregs of the trading world, those who trade mortgage-backed securities:
Bonuses are down across the board for these folks in 2007. In the meantime, all isn't hunky-dory for those who need to package these mortage-backed securities and the like into collateralized debt obligations and other sorts of weapons of financial destruction:
Things ain't too hot either in asset-backed securities or collateralized mortgage-backed securities (for commercial real-estate):
So in what asset classes are traders doing well? According to the survey, investment grade traders are doing well as folks flee subprime-related riffraff. Emerging markets ain't doing too badly, either (see the online article for more). However, the ones who take the cake are, drum roll please...the commodities traders. As if that's any wonder:
I very much suspect that layoffs will hit more traders in the first three asset classes mentioned above sooner or later. Better buy a metal detector and hunt for gold, Charlie, like those crazed Californians.
It has been almost 160 years since the first California gold rush but, with prices hitting record highs, prospectors are once again flocking to the state’s rivers and deserts in search of the precious metal. Gold’s ascent – prices crossed the $1,000 an ounce barrier this month and remain well above $900 – has sent sales of mining equipment soaring.
“There’s been a dramatic change . . . our sales have risen four-fold in the last three months,” said Harrigan McGregor, owner of GoldFeverProspecting.com, an equipment retailer in northern California. “This is the second big California gold rush. We’ve had a lot of phone calls from people who are quitting their jobs and prospecting full-time.”
The growth of prospecting by individuals has been accompanied by a sharp increase in commercial mining activity. Commercial claims, most of which involve gold mining, rocketed to 2,274 in the first quarter of this year, up from 132 in the same period of 2005, the Bureau of Land Management says.
Roger Haskins, senior specialist for mining law at the BLM, said the high price of gold was “obviously driving [mining] activity up tremendously. We have a market imbalance at the moment and there’s more demand than supply,” he added. “Gold sits in a little niche because it’s speculative . . . People buy it as a hedge for the future.”
Membership in the Gold Prospectors Association of America “has tripled in a very short space of time”, said Corey Rudolph, an official of the southern California-based group, which organises events for recreational miners.
The hotspot is a 320km strip known as the Gold Belt, or “Motherlode”, which runs near Highway 49 (named for prospecting “49ers” of the 19th century) and the Sierra Nevada mountains. Mr Rudolph said 5-10 per cent of available gold had been mined. “There’s still a lot of gold out there for the smart guys.”
The market in second-hand gold is also booming, with southern California pawnshops reporting increased trade as people sell unwanted gold items. Depending on the quality, these items can be refined and resold. However, Mr McGregor said raw gold can fetch even higher prices. “If you find a nugget larger than your pinkie finger, it could sell for up to 30 per cent more than the spot price.”