18
Jan
2011

A Value Investor buys into gold (oh my)

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A friend of mine, Aram Fuchs runs a fund called FertileMind Capital out of New York. We met online through a mutual interest in examining new media companies and assets from a value investing framework and have since met in-person. He recently sent me a copy of his annual letter to shareholders, his fund returned 21.99% in 2010 (compared to %15.06 on the S&P500 and %11.02 for the DJIA).

Breaking rank with most value investors (there’s a couple of good threads on the “uselessness” of gold over on my favorite value investing forum, here and here – which I disagree with, btw), Aram considers is puzzling that market participants can’t bring themselves to view the one immutable medium of exchange as “money” and can’t find it necessary to question conventional wisdom a.k.a Keynesianism.

The title of the report is “Lucrative Paradox Of 2011“.

2 responses to “A Value Investor buys into gold (oh my)”

  1. A good story on the value of gold is explained in a old movie with Humphrey Bogart called “Treasure of Sierra Madre.”
    http://goldcoinscanada.blogspot.com/2011/02/silver-bullet-and-silver-shield.html

    Basically, if 1000 miners go into the hills in search of gold for 6 months, ONLY ONE miner will be fortunate enough to find it. Gold represents 6 months of labour of 999 men who did not find the gold. That’s about 500 years! Now you know why gold has value and why it has been a measure of wealth for thousands of years. NO other investment or financial product can make this claim.

  2. Roy Stanton says:

    Gold is the only true store of value. Supply is limited and only increases by about 1-3% per annum (equivalent to world GDP growth). It cannot be manipulated and does not rely on the “trust me” please of fiat currency central bankers!!
    It will still be around in 1000 years, whereas the US dollar and Euro will be gone in 10!

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