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From Bad to Awful (Is Gold the Answer to Doom'n'Gloom)
Barron's ^ | 29 December 2003 | VITO J. RACANELLI

Posted on 12/27/2003 1:32:38 PM PST by shrinkermd

Edited on 04/22/2004 11:50:42 PM PDT by Jim Robinson. [history]

An Interview With Hugh Hendry -- As you enter the Odey Asset Management conference room in London, you'll see a large painting of a fog-enshrouded skiff that a lone figure is piloting toward a dull and faraway light. It goes a long way to explaining the firm's attitude toward investing. Hedge-fund manager Hugh Hendry happily concedes that he's an apostate from fundamentalism, uses technical analysis liberally, and hasn't met with a company management in "five years, thank God." The Scotsman with Glasgow working-class roots admits to having no friends beyond the Reuters mini-terminal he carries in his pocket. He eschews the focused-fund approach and what he calls Taliban-like fundamentalism in the market.


(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Editorial; Foreign Affairs
KEYWORDS: 1buyandeatgoldnow; 1preciousroy; 1whoispreciousroy; bear; buygold; gold; holdgold; market; money; printing; sellgold; whoknows
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Last week Barron's had an article that basically trashed gold equities. This week they have a different author with a different view.
1 posted on 12/27/2003 1:32:39 PM PST by shrinkermd
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To: shrinkermd
Interesting article on the whole; I don't agree or disagree. This caught my eye:

The stock market sees a bright future for cheap drugs. It sees a lousy future for expensive drugs.

Seems to me the market for 'cheap drugs' is flat or declining by definition; the future has to be in 'the next thing'.

A sick person with no other choice will choose the drug that works, price be damned.

2 posted on 12/27/2003 1:39:57 PM PST by IncPen ( "Saddam is in our hearts! Saddam is in our hearts!" "Saddam is in our jail!")
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To: Tauzero; Starwind; AntiGuv; arete; sarcasm; David; Soren; Fractal Trader; Libertarianize the GOP; ..

3 posted on 12/27/2003 1:50:10 PM PST by sourcery (This is your country. This is your country under socialism. Any questions? Just say no to Socialism!)
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To: shrinkermd
Gold is insurance against a fiat currency being devalued to the point of being worthless...and every fiat currency every circulated has eventually had that happen to it.
4 posted on 12/27/2003 2:48:36 PM PST by Orangedog (Remain calm...all is well! [/sarcasm])
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To: shrinkermd
Two years ago I gold coins from Lear Financial. I bought $10 pre 1933 uncirculated Liberty gold coins and $5 Liberty gold coins. I spent several thousand dollars. I won't say exactly how much, but a decent sum from my mom's estate money. To date I have tripled my money and it looks like this is just the start. I was stunned when gold breached $325 now it is over $400. I think $800 is realistic and that is for bullion. Collector coins almost always beat bullion, because there is a finite supply and that supply is a lot smaller than the tens of thousands of ounces of bullion.
5 posted on 12/27/2003 2:56:12 PM PST by ExSoldier (When the going gets tough, the tough go cyclic.)
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To: ExSoldier
OOPS, I meant to say I bought gold coins.
6 posted on 12/27/2003 2:59:01 PM PST by ExSoldier (When the going gets tough, the tough go cyclic.)
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To: ExSoldier
Personally I'm not a fan of numismatic coins. I've come across some people who got burned on gradings. If the SHTF, I don't think the value of collectable coins will hold up above the cost of the bullion, but that's just my opinion. I buy gold eagle. Might get some maple leafs and Krugerrands too. Bullion grade coins are cheaper to buy and don't assaying problems when it comes time to sell like bars and ingots. But if you bought from someone like Lear or Blanchard, you will likely be OK on coin grading.
7 posted on 12/27/2003 3:10:07 PM PST by Orangedog (Remain calm...all is well! [/sarcasm])
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To: Orangedog
Take a look at these chart, comparing the change in the price of gold in various currencies over last year:

http://www.goldbullion.com.au/au/charts/gb_charts.php

8 posted on 12/27/2003 3:48:24 PM PST by MoralSense
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To: Orangedog
If the SHTF, I don't think the value of collectable coins will hold up above the cost of the bullion, but that's just my opinion. I buy gold eagle. Might get some maple leafs and Krugerrands too

Collector coins seem to go high when the various gold sellers promote the 'confiscation proof' story. Anything less than a MS 65 or 66 is really not of interest to serious collectors, even serious beginners usually wanting 63 and above. All that MS 59,60 etc. stuff is not really rare enough to sustain a high premium for long in a down gold market. I generally buy MS 65/66 stuff for my collection and low grade 'bullion' coins for gold as a metal. One of the better and often overlooked bullion coins is the Mexican 50 peso. 37.5 grams of gold (1.2 oz) and it usually sells for the same premium over spot as a 1 oz. ingot (which makes the premium less per ounce). They're really big, good looking coins. It's just plain fun to stuff a few dozen of them in your pockets and walk around jingling sometimes. Maples, Eagles, Pandas, Krugerands are all very good choices as well, of course. In any event, I suggest staying away from any of the minor coins, bullion medallions, etc if you think you may need to liquidate them in a hurry, since thay are not as readily recognized by anyone other than dealers. The minor coins and bullion medallions and ingots do make a nice collection if you are not worried about rapid (possibly black market) sale in an emergency, and generaly have a very low premium on them.

9 posted on 12/27/2003 3:58:28 PM PST by templar
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To: shrinkermd
Good article. Thanks for posting it for us.

Richard W.

10 posted on 12/27/2003 5:23:02 PM PST by arete (Rebellion to tyrants is obedience to God.)
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To: arete
Agreed. This guy looks like someone who knows how to make money in good and bad markets. I'm thinking about checking into this Odey Asset Management fund. This is the most logical sounding bear I've heard in quite a while.
11 posted on 12/27/2003 7:55:33 PM PST by Elliott Jackalope (We send our kids to Iraq to fight for them, and they send our jobs to India. Now THAT'S gratitude!)
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To: arete
Say, you wouldn't have any info about how one would invest in the Odey Eclectica hedge fund, would you? Or is this one of those "only for the big boys" kind of funds?
12 posted on 12/27/2003 8:00:26 PM PST by Elliott Jackalope (We send our kids to Iraq to fight for them, and they send our jobs to India. Now THAT'S gratitude!)
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To: arete; Jim Robinson
I forwarded this post to a friend this afternoon and got this response:

I find it incongruous that someone on "Free Republic", presumably knowing right and wrong about what is protected intellectual property, could just lift something from Barron's, in toto, on the very day that it's published and "give it away" to the world at large......that is, pure and simple, theft.. Maybe that's what they mean by "FREE" REpublic. Just take it and give it away free. It seems to me that Mr Free Republic, whoever that is, is facilitating a major copyright violation, and subjecting himself to legal sanctions, unless he (Mr FP) makes it OVERT that one mustn't do that on his site. Bad Freeper, no biscuit.

Maybe this illustrates the difference between conservatives and libertarians (the latter actually understanding the principle of private property)

SO I went to the WSJ Online and signed up for $79 a year so I could read it legally....(WSJ online gets one Barron's as well). I had this for a long time but I let it lapse a while ago). $79 a year is 22 cents a day....well within the reach of the average conservative.

Having written all these I see on the FRP site that LA Times and Wash Post sued for copyright infringement in the past, and won. Good for them. Obviously some of the people who are posting couldn't care less. If I were Mr Freep, I would care very much, and not just for legal liability reasons. After all, how can people prattle on about restoring the Constitution, etc, when they can't even follow a simple commonsense rule -- at the heart of a free society--don't take other people's property?

It bothers me that a paying subscriber to an online publication would post it to FR. Am I wrong in this judgement?

13 posted on 12/27/2003 8:49:49 PM PST by Misterioso
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To: Misterioso
I don't know, but to be on the safe side, we'll excerpt it. BTW, your friend has sent the same complaint to me also.
14 posted on 12/27/2003 9:03:06 PM PST by Jim Robinson (All your ZOT are belong to us.)
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To: Elliott Jackalope
This is the most logical sounding bear I've heard in quite a while.

He does cut through all the flim flam and hype and just makes his point, doesn't he. I have to read the article again and see if I missed anything. Hope he isn't one of those darn "book readers".

Richard W.

15 posted on 12/27/2003 9:30:54 PM PST by arete (Rebellion to tyrants is obedience to God.)
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To: arete
So I did some looking on the web, and found out about the Odey Continental European fund, and downloaded a prospectus. Guess what? It is not available to U.S. investors. Figures. The first fund I've heard about in a dog's age that actually has me interested, and I can't invest in it. *sigh*. Somedays it just doesn't pay to get out of bed....
16 posted on 12/27/2003 9:48:21 PM PST by Elliott Jackalope (We send our kids to Iraq to fight for them, and they send our jobs to India. Now THAT'S gratitude!)
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To: IncPen
"A sick person with no other choice will choose the drug that works, price be damned."

A sick person with government-defined choices will be assigned the cheapest choice, prognosis be damned.
17 posted on 12/27/2003 10:53:00 PM PST by Tauzero (The Centre is planning a new urea-pricing policy for fresh investments)
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To: Misterioso
I note you purchased WSJ and Barron's after reading the article posted. If Barron's is as smart as I think they are, they will not resent posting an article that garners them money and exposure.

If the policy of FR is not to include articles from the WSJ and Barron's, so be it. I have no problem with that. Perhaps it would be better for someone to contact Barron's and see what they want.

Remaining ignorant of important matters does not seem to be a protection of property to me. How can one claim ownership of a political position on the economy and gold when the same position is held by so many? Read any KITCO gold posting, Bill Murphy, Chapman, any of the free and paid gold newsletters and you will find the same information that the author posed. This was an unpaid (presumably) interview of a public figure (Hedge Fund Operator) and not a creative work of literary art.

I guess if Barron's and the WSJ wish to remain exclusive they will achieve this, but,again, to what end?

18 posted on 12/28/2003 2:54:19 AM PST by shrinkermd (i)
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To: ExSoldier; Orangedog
Collector coins almost always beat bullion, because there is a finite supply and that supply is a lot smaller than the tens of thousands of ounces of bullio n.

Personally I'm not a fan of numismatic coins. I've come across some people who got burned on gradings

I was a coin collector before anybody ever heard of coin collecting.

I stopped when standardized grading was getting started.

The problem is that "values" vary manyfold over grading differences that are not real or not reproduceable among independent graders.

I can easily grade, and tell the difference between, F-12, XF-40, and AU-50 for most coins.

For most rare American coins, the move from F-12 to AU-50 triples the value. So far, so good.

I can't, and I don't believe anyone else can either, reliably grade over MS-63 to MS-67. This "difference" can carry a price premium of tenfold or more.

Many, many people have lost lots and lots of money in "collectible" coin butcher shops, mostly over the difference between MS-63 and MS-65. To my eye and my educated opinion, there is no difference.

The problem with numismatic gold is worse. It is the same problem with gold stocks-if gold ever becomes money (possible, not probable)-it will be because markets that recognize surrogates have ceased to function.

The day your MS-65 1907 high-relief Roman numeral double eagle becomes money is the day its value will drop to whatever 0.91 oz fine gold is worth that day.

19 posted on 12/28/2003 4:06:35 AM PST by Jim Noble
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To: templar
Anything less than a MS 65 or 66 is really not of interest to serious collectors, even serious beginners usually wanting 63 and above. All that MS 59,60 etc. stuff is not really rare enough to sustain a high premium for long in a down gold market. I generally buy MS 65/66 stuff for my collection and low grade 'bullion' coins for gold as a metal.

Numismatic gold is beautiful, but a very, very poor emergency plan.

Bullion, as you point out, is much better for a rainy day.

20 posted on 12/28/2003 4:09:53 AM PST by Jim Noble
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