Gold's Just Getting Started - Barron's Interview 28 comments
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Joseph McNay of Essex Investment Management is one of the all-time greats of growth investing. In this week's Barron's interview, McNay shares his thoughts and picks for the current economic slowdown.
- Gold: M3, a broad measure of U.S. money supply (see graphic), is growing at almost 15%/year (vs. a typical 5%), driving the dollar down. While some cite gold's already-high prices, McNay notes that at its peaks, gold has traded at the same price as the DJIA; right now it sells for 1/14 of the Dow. He recommends gold ETFs streetTRACKS Gold Trust ETF (GLD) and Market Vectors Gold Miners ETF (GDX). He also suggests owning Chinese yuan rather than U.S. dollars. As the yuan revalues upwards, it will offer protection against purchasing-power erosion.
- Biotech: Genentech (DNA), Gilead Sciences (GILD) and Celgene (CELG) have good products, great growth and 'no risk' from economic slowdown or a falling dollar. BioMarin Pharmaceutical (BMRN) has some nice products, and Intuitive Surgical (ISRG) is the leader in robotic surgery.
- Emerging companies: Aladdin Knowledge Systems (ALDN) is an overlooked company that develops security software for application access. Earnings are growing at 20%-plus. Perrigo (PRGO) gives off-patent drugs private labels for drug stores. VASCO Data Security (VDSI) makes information-access security software. Quarterly sales have been growing at 60%.
- Agriculture: DuPont (DD) has a new seed business that will compete with Monsanto Company (MON), yet it sells for 13x earnings.
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This article has 28 comments:
Talk about "the pot calling the kettle black!"
Bottom line: if you consider gold and silver a safe haven (and if you have half a brain and know ANYthing about history, you'll know it is), then you will buy and have with you physical gold and silver. jt
If the "gummint" makes it illegal to trade in gold/silver or possess the physical metal -- however unlikely that seems to me -- exactly how will physical possession benefit you? Will you be able to take your ingots to the grocery store and cut off a few slivers for bread and milk, or cut off a piece to buy gas for your vehicle? I think not.
If you believe that upon the continued disintegration of the dollar, there would emerge an underground economy where gold/silver are the currencies that are trusted in, I suspect that you have no experience in working in an underground economy, or in any other activity that is proscribed by the government with penalties, prosecution, and jail time involved.
Go out any try to purchase a small amount of heroin, cocaine or even pot, and phone me from your jail cell to tell me I was right. Yes, such activities do take place, and even flourish in some places, but in the mainstream, they do not. Dealing in illegal items is a tricky business. You've been living too long in a free society if you believe otherwise, and are naive fools.
If precious metals are to provide any benefit at all, it is in their purported ability to hold their value while the fiat currencies inflate away to a tenuous nothingness. XTFs or coins from the local coin store (huge markup included) maintain their value by being able to be traded. If one cannot trade something, its value is limited to its usefulness to the owner. If you don't own a boat, and can use it as keel ballast, I think the things gold in particular can be used for (jewelry is another) is pretty limited.
And for that matter, if "the gummint" bans physical possession of gold, exactly how do you think they would confiscate all the gold jewelry that is spread throughout the population? Would they confiscate gold fillings? Is ANY of this reasonable or is there ANY historical precedent within this country for such nonsense? I think that confiscation of gold and/or silver, or even the simple banning of trading in such items is about as likely as making gun ownership illegal and confiscating all the guns in our heavily-armed nation. It simply ain't gonna happen, no matter how much some would prefer it, or others think that it will occur.
For the record, I own some gold XTFs and gold mining mutual funds, although I'm seeing a point down the road (possibly this year) when we see a periodic spike in the price of gold and it collapses back for another 20 years. I'll be selling then (I hope, timing is a dicey game), and I'm hoping y'all will still be buying at that point.
BTW...just read this about what's happening in Vietnam...and which I believe will (and probably is already starting to) become more widespread: prices of goods in some of the markets, esp in the larger cities, is being adjusted to the price of gold. Those who've never really lived under a gold standard really don't understand what it means and believe it can't and won't happen again. The sheeple people of this country esp have been brainwashed to think that gold is a "barbarous relic" (as opposed to what it really is...the ULTIMATE world currency). That's what the Fed and other Central Bankers want people to think so they can continue their theiving reign...lending "money" to the Treasury...non-existen... infinite, electronic money...in return for interest payments, which the working class--that's US-- has to pay..."something for nothing, and their chicks for free." MTV's not the only way. jt
physical gold only can offer protection for the
little guy.
Here is a passage from "The Battle for Investment Survival" from Gerald M. Loeb - pp. 22
In the history of the world we find the record of savings really saved through buying gold, hoarding precious stones, and other forms of "hard wealth" privately secreted. In the future history of America most of us will, in my opinion, learn this lesson too late...
Curiously, it is those of slight wealth who need this sort of protection rather those of great means, who can really suffer large depreciation without feeling the loss. And it is usually the latter who are best fitted to cope with the problem... "
if you wanna own gold. Sure, it's convenient,
there is little spread, you don't have to worry
about storage, but at what cost???
You're basically handing money over to an
entity, giving control over to them, in return
for a paper claim to the gold which may or may
not be there. This was a great idea for the gold cartel to absorb the recent growing investment demand for gold without having to give in to physical delivery.
For those of us with investment assets in the hundred thousand dollar range, you need to own
physical gold to protect yourself. You never know
if tomorrow everything's gonna go to crap and Bush signs an executive order banning gold ownership - "for the good of the country". This has happened before in 1933, and lasted some 40 yrs. So it could happen again. Basically you'd have to take your gold and move out to some other country like switzerland for safe keeping.
One answer to your question on how to invest in Chinese Yuan is to purchase ADR's of profitable companies that have assets priced in Chinese Yuan and revenue in Chinese Yuan.
At this moment the prices of these ADR's are still behaving as if they are US shares, but sooner or later investors will recognize their intrinsic value and re-price them on the US exchanges.
Meanwhile, as the value of their US$ price erodes, they are becoming bigger and bigger bargains.
@spin ... If I was you, I would keep the .38 separate from the stash, somewhere more accessible. ;-)
fot hose interested. The Mint holds your physical Gold for free. It is Western Australia Govt. backed.
regards.
tinyurl.com/25p7j5
On the other hand, the stock bubble is being fueled by yen carry trades:
tinyurl.com/24kbqx