I rang RR on his 2SM radio show late last year. I talked about...

I rang RR on his 2SM radio show late last year. I talked about the overvaluation of the equity markets, the mini housing bubble, and the low rates of return from cash... and his response was to stay in equities for this exact reason- where else could you park your money when the alternatives are so bad?

I responded by answering GOLD--- and he, and his co-host (Graham Richardson) almost fell off their chairs.

RR argued that gold is a proxy for inflation, and that the world economy was facing deflation, not inflation.

I agreed with him on this point, but also pointed out that historically gold has outperform other asset classes during periods of deflation. Gold is the ultimate safe have, not only from military conflict, but also from financial instability.

Following my above comments, Richardson butted in and as in many words called me a fool, reasoning that gold has grossly underperformed for 20 years. (the rear view mirror syndrome)

Rene agreed.





This conversation took place some time in Nov/Dec 2002, when gold was below $330.

I wish i'd taped it-- it would have made great replaying in a few years time... :)


I might ring Rene and friend again in a few more months, and educate then further on the markets.

BTW, Rene was an advocate of comparing the PE of the cash rate (the inverse of 2% .i.e PE 50) as justification for the high PEs in the US equity markets at present.

.... and Rene reasoned that the PE for the SP500 was in the high teens/low twenties, when all credible market studies point to GAAP earnings placing the SP500 on a PE north of 40.


Ignorance is bliss...