Christopher P. Bloomstran, President and Chief Investment Officer of Semper Augustus Investments Group LLC, Interviews with The Wall Street Transcript: A Niche for Gold Mining in a Concentrated Equity Portfolio

Wall Street Transcript

67 WALL STREET, New York - April 2, 2013 - The Wall Street Transcript has just published its Investing in Gold and Value for Downside Protection Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - High Quality Companies - Global Investing - Investment Strategies - Large Cap Investing - Longer-Term Investing - High Quality Companies - Investing in Gold - Long-Term Value Conservation - Precious Metals

Companies include: Berkshire Hathaway Inc. (BRK-A), Newmont Mining Corp. (NEM), Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC), Mercury General Corp. (MCY), Pepsico, Inc. (PEP), Johnson & Johnson (JNJ), General Electric Co. (GE), Microsoft Corporation (MSFT), The Coca-Cola Company (KO), Citigroup, Inc. (C), Leucadia National Corp. (LUK), Exxon Mobil Corp. (XOM) and many more.

In the following excerpt from the Investing in Gold and Value for Downside Protection Report, an expert portfolio manager discusses his investment philosophy and his portfolio-construction strategy:

TWST: What about the idea that gold might become the international currency, replacing the dollar?

Mr. Bloomstran: Some very legitimate people have made the case that we need to revert back to currencies that have some backing by gold or some other tangible store of value. We were there before, prior to 1933, but I don't know that it works now. I don't know how you get a $9 trillion commodity backing the currencies supporting infinitely higher stocks of assets and liabilities.

But I do know that the history of currencies over time is that all currencies ultimately revert to zero. But if you are going to live for 1,000 years or for 2,000 years, I'm not sure you would want to own gold either because even at 1% or 2% compounding over enough years, the math doesn't work. Currencies get repriced, assets and liabilities get repriced and even gold gets repriced.

The reality is nothing can compound at a relatively high rate forever, but the stock of gold has stood the test of time, just as 100% of currencies have failed the test of time. Gold always becomes a store value when we lose faith in currencies and the value of currencies declines.

And I'm not sure how that transitions and plays out. It is not an asset that appreciates during the leveraging phase, which is most of the time. We are reluctant to own these gold companies and really only are excited about them now that the prices of the mining companies are so cheap. I would rather own businesses that have pricing power that sell things that have end demand in any kind of monetary or fiscal climate. We like companies with the ability to raise prices as their own internal input costs go up, companies that are selling durable and staple goods with static demand around the world, and that are selling...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments (0)