Hedge-Funders Are Bullish on Gold, Guns, and Inflatable Lifeboats

Discussion in 'Wall St. News' started by ipatent, Jan 15, 2009.

  1. ipatent


    <p><a href="http://nymag.com/news/features/all-new/53372/">The New Paranoia: Hedge-Funders Are Bullish on Gold, Guns, and Inflatable Lifeboats </a></p>
    <p>Preparations, in Lange&rsquo;s case, include a storeroom in his basement in New Jersey stacked high with enough food, water, diapers, and other necessities to last his family six months; a biometric safe to hold his guns; and a 1985 ex-military Chevy K5 Blazer that runs on diesel and is currently being retrofitted for off-road travel. He has also entertained the idea of putting an inflatable speedboat in a storage unit on the West Side, so he could get off the island quickly, and is currently considering purchasing a remote farm where he could hunker down. &ldquo;If there&rsquo;s a financial-system breakdown, it could take a year to reset the system, and in that time, what&rsquo;s going to happen?&rdquo; asks Lange. If New York turns into a scene out of I Am Legend, he wants to be ready. He&rsquo;s not the only one. In his book Wealth, War, published last year, former Morgan Stanley chief global strategist Barton Biggs advised people to prepare for the possibility of a total breakdown of civil society. A senior analyst whose reports are read at hedge funds all over the city wrote just before Christmas that some of his clients are &ldquo;so bearish they&rsquo;ve purchased firearms and safes and are stocking their pantries with soups and canned foods.&rdquo; This fear is very much reflected in the market&mdash;prices of corporate bonds have been so beaten down at various points that they suggest a higher default rate than during the Great Depression. Meanwhile, while the overall gold market has fluctuated, the premium for quarter-ounce gold coins&mdash;meaning the difference between the price for gold you can hold in your hand and that for &ldquo;paper gold,&rdquo; such as exchange-traded funds&mdash;rose to an all-time high of 20 percent. &ldquo;Gold is transportable, it&rsquo;s 100 percent liquid, and it&rsquo;s perfectly divisible in the context of ounces, bars, or coins,&rdquo; says the head of a California research firm who keeps a supply of it, along with food, water, and guns, on hand. &ldquo;And most important, there&rsquo;s no counterparty&rdquo;&mdash;i.e., it&rsquo;s an investment beholden to no one, and perhaps one of the few assets that will retain value if the financial system collapses.</p>