Julian Robertson: Bearish on Gold and Bonds, Bullish on Credit Cards and Galleon Arrests

He doesn’t have much company among his peers, but hedge fund legend Julian Robertson is decidedly bearish on gold.

Many other hedge fund managers have made big bets on the precious metal this year, including John Paulson, Daniel Loeb and David Einhorn. But Robertson called the enthusiasm for gold “certifiably crazy” at the Value Investing Congress in New York this week.

The gold market does not reflect any supply or demand fundamentals, the Tiger Management founder said, and the metal is trading at the same price as 30 years ago. Instead, count Roberson as a plastic bull and a paper bear.

Robertson said credit card companies such as Visa (V) and MasterCard (MA) have huge growth potential, and said that shorting bonds was a better inflation hedge than gold.

He also lauded what might be called the Galleon Group strategy, saying that two stocks that were allegedly the subject of insider trades by the hedge fund’s founder are good bets: Intel Corp. (INTC) and Google (GOOG). The former is cheap given “its intellectual superiority” while the latter “appears over the moon, but is still growing rapidly.”

He also touched directly on the Galleon case, saying he was “delighted” by the arrest of Raj Rajaratnam and five others in a $20 million alleged insider-trading circle.

“I think the crooks should be weeded out,” he told Reuters.

Comments

[CLH:]

I agree that gold is going up only if the dollar disappears (which it wont). However, I think that betting that Galleon with their nickels and dimes will sink GOOG and INTC makes no sense.

Oct 25 10:59 AM

[Joe Bruin:]

This is poor reporting. This article did not mention that Julian likes gold miners.

Oct 25 01:48 PM

[The Recusant:]

Robertson said "gold market does not reflect any supply or demand fundamentals" and he has also said that the consumer is exhausted and the government will have "to inflate its way out." That IS the supply and demand fundamental, exchanging devaluing dollars for gold.

Oct 25 05:23 PM

[Bruce Pile:]

The supply and demand "fundamentals" for gold are like those for teen retailers - subject to immediate change for no sound reason. The jewelry part lends itself somewhat to supply/demand analysis, but both jewelry and investor angst are about as inscrutable as teen fads.

This means fundamental analysis is the LAST method you want to think about when analyzing gold. That leaves technical and fractal - and they both seem to agree that gold is in a strong primary move up.

Oct 25 10:57 PM