DAVID EINHORN: A RARE INTERVIEW
22 November 2010 by Cullen Roche
22 Comments
WealthTrack with Consuelo Mack aired this rare interview over the weekend with David Einhorn of Greenlight Capital. Mr. Einhorn describes what happened to the US financial system that resulted in the current crisis and how many of these problems persist. Einhorn also covers his broader investment outlook. He says QE2 will not succeed, he would not own any of the big banks and explains his outlook on gold and why gold represents real money. He also goes into detail regarding his current portfolio, what he likes, what he dislikes and why it is more difficult to find good long positions (than shorts) in this overvalued market:
Stocks may be overvalued but everything else is worse. It’s just not a great time to invest. Forget gold, it’s a speculative game and the public will be left holding the bag as usual.
And stocks are never speculative and the public is never left to hold the bag…
an ounce gold will go to parity with the dow if you believe all this bailout n papered over houses n banks won’t work.
i do not believe it will work.
i watched some friends loose millions in the tech collapse….they were left holding that bag…..was that more acceptable since it was corp stocks?
some will be left holding the gold bag also.
its a bubble world for years to come us being 1/2 way thru this secular bear that started in 99′
I simply don’t understand the logic of his belief that “it’s money” (i.e., gold). You can’t buy things with it; you first have to sell it and convert it to the local currency, right? I guess I don’t get this kind of talk. He also says, “the govt can’t print more of it.” OK, then it’s not money! Which is it? Of course he must mean it’s “like” money, but it’s not really “not like” money but sort of like it if you pretend we are in the old west and walking into the dry good store in Pale Rider.
I just don’t see what point is being made with this kind of talk. It doesn’t “always hold it’s value” (you can lose your ass) etc. It may be a good investment, but it’s not money.
I have 160 acres of good pastureland in Oklahoma I would take 300 oz of Eagles or Buffalos for right now. You don’t have to convert to fiat paper!
Nouriel Roubini: A Not So Rare Interview
http://plus.cnbc.com/rssvideosearch/action/player/id/1652444479/code/cnbcplayershare
Europe, China, Ian Bremmer, insolvency, legalizing marijuana.
RE: “A Not So Rare Interview”……Thanks, that made me laugh.
The gov can not print gold, but the miners can certainly dig it up! LOL.
Who cares, it’s a major bull market and the miners are going to the moon, think .com’s 97-00, ripe for massive profits.
But start buying bullion coins, storing food/water/ammo and getting all emotional about gold and you will eventually find yourself very poor.
Gold overvalued? Stocks speculative. That’s silly talk.
Take a position in whatever, but have an exit strategy. The only thing you can control is how much you are willing to lose.
Maybe I’m in a mood, but he sounds amazingly self-serving in this interview. He’s holding a lot of gold and he’s looking to sell a little now that deflation is starting to become more of a reality than the inflation hypothesis he’s still stoking.
@Paul
As far as I know he bought gold in the US$900 range.
Therefore I think he could slowly sell at anytime without having to spruik his message in what is a very low rating investment show.
Lets have some clear thinking on this.
funny how all the socialist invariably hate gold unless like soros their money is more important to them than their politics.
no need to worry jeff saut will refute all those claims. thanksgiving week is historically higher. and with his analysis santa is coming for the bulls. jeff protects himself with a break of 1160-1130. jeff and tony dwyer are on full bull mode.
http://pragcap.com/saut-cautiously-optimistic
Hi,
Would it be possible to put a transcript? I’m hearing impaired and would love to read one.
Cheers,
Zotz
Zots, try this link in a few days. Looks like they haven’t posted it yet:
http://www.wealthtrack.com/transcripts.php
Best,
Cullen
Gold is a great store of value, sure, due to its properties (chemically stable and rare).
But gold is *not* a good currency for several reasons:
1 – it does not degrade rapidly enough
2 – the decay rate cannot be easily managed
3 – supply cannot rapidly be expanded or contracted
4 – it is frequently hoarded
5 – underground gold is not distributed equitably around the planet
6 – it is not physically convenient
Returning to a gold standard would be a disaster. About the only scenario I can think of where gold makes sense is that it is used as an *external* calibration marker for currency valuation / composition in something like an ECU or SDR. Even then, it’s not really that useful if forex markets are truly open (no pegs).
Some salient points: Gold never goes to zero. Currencies do. There is a finite supply of gold, therefore those types of individuals like Mr. Bernancke who suppose that they can print into infinity, with the erosion of confidence will surely fail. We can pretend as did the glorious Mr. Nixon that the basic economy can provide an adequate barometer of the dollar’s strength. History shows it doesn’t work. Ultimately all of the sophisticated experts will end the bubble mentality by loudly proclaiming “We never saw it coming!” By the way, reality will show conclusively that currency, not gold is in a bubble. I don’t hold gold stocks or paper certificates. These will ultimately be subject to “bubbles”. I am not religiously tied to gold, but I do deal in stark reality.
By not understanding the value of gold (and silver), the majority of people see the precious metals as little more than “trinkets”. Kirk understands it and I think more people will as time goes on. If I had an asset to sell such as a car or land, I would gladly consider taking gold for it if the numbers work. Some people will never understand this but others may when dollars are printed in 2-ply form so they can be used for other purposes.
JA
If goverments are trying to inflate away debt, then why can’t joe public do the same, my kids pension fund ($10k input) up 2000% in ten yrs, plus a yield/divi of 90% per yr which will go back to zero when rates exceed 6%,has the benefit of outstanding interest only debt falling (purchasing power)in value by 10% per yr, the bad news is over the next 20yrs you would need to treble the % return above just to stand still, I ramped gold 12yrs ago there are better over-oversold investments out there with a yield, it all depends how much bang/leverage you feel confident in applying, but then the few who are creaming off to much money are creating a dangerous world
What he means by the phrase “gold is money” is explained in detail by Murray Rothbard in his book “What Has the Government Done to Our Money?” available free online at:
http://mises.org/resources/617
You can get it as PDF, eBook, or even mp3 audio. The book shows that our view of money is shaped by what we have experienced in our lifetimes, as opposed to longer historical periods, say hundreds or even thousands of years. Note in the interview that Einhorn attributes his ideas on gold to his grandfather, who lived many years ago. Rothbard presents sound economic reasons for why markets favor commodity money (usually, but not always, gold or silver) as opposed to fiat money.
The Islands of Kauai AND Nihua were purchased for 10,000 Silver Dollars. I will sell my Off grid Earthship built to code, no utility costs at all, sitting on 50 Survey acres free and clear in Taos County New Mexico with ALTA Warranty Deed for the same 10,000 dollars in Silver Eagles (true US Dollars as defined by Congress!). I don’t care what year Eagles..1986 to 2010 are all good.
Today..right now..No conversion to any Fiat currency required!! No questions asked.
The home has new fencing (bring your horses or cattle cause there is plenty of water less than 100 feet down..I know, I live there), has a PV system large enough to power 3 homes, Radiant floor heat, a Shop/Garage with heated floors, a Guest cottage and a storage building. Taxes are 750 Federal Reserve Note “Dollars” a year and they are paid up. The home backs up to National Forest full of Pinon and Pondarosa Pine and there’s enough Elk and Mule Deer to hunt for several lifetimes. The views are picture postcard EVERY DAY. Hard surfaced hiways so no 4 wd required.
I’ll save this post site and anyone here posts they’ll take the deal and I’ll be in contact THAT DAY. You deliver the Coin to Centinel Bank in Taos New Mexico on a sight draft and I’ll bring the Deed and even pay the closing cost.
In 1999 I was buying both Gold and Silver, I still am. Silver then was $2.65 an ounce, gold under $300 so if you bought your coin then you can have the deal of the Century now. You do the math at what those Silver Eagles cost then and compare today. Remember..no utility bills ever.
Anyway..there’s the deal and we’re not in some Clint Eastwood movie either. I’ll accept the equivelent in Gold coin or hallmark bullion bar but prefer Silver Eagles. If your a large investor in them like I am you already know why.