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Jean-Marie Eveillard Interview


Parsad
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Nice interview.  Thanks Sanjeev!

 

The full interview is at http://www.advisorperspectives.com/newsletters09/Au_revoir_Jean-Marie_Eveillard.html

 

I find his comments on gold interesting:

 

Our gold position is based on our belief that gold is a universal store of value. We believe a gold position of less than 5% of our assets is irrelevant and a position of more than 15% would be too painful if we are wrong...

 

After World War I, during the great inflation of the Weimar Republic, the German government acted very shrewdly.  They forbade German citizens from buying gold and from holding foreign currencies, and they taxed real estate very heavily.  As a result, some rich farmers bought grand pianos.  They did not want the paper currency being issued, because they knew it would be worthless the next day.  Instead, they chose pianos as a hard asset that would hold its value.  Today, we see gold as having these same characteristics.

 

The current actions of the US and UK governments, through “quantitative easing” – which is really just a code word for printing more money – will be rather good for common stocks.  Initially, at least, these actions will be bad for cash and Treasury bonds.  At some point, they will be good for real estate and fine art.  However, these actions are very good for gold.

 

The path of increased money supply leads to real assets, and gold is our asset of choice.  Common stocks will also benefit, as they are representative of real assets.

Remember, the opportunity cost of holding gold is near zero, because interest rates are so low.

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