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Hugh Hendry: "I Have No Idea Where The Stock Market Is Going To Be"... But "I Am Long Gold And Short The S&P"

Tyler Durden's picture


One of the best presentations at this year's Economist Buttonwood gathering (which is still being live-streamed here), was, as usually happens, Hugh Hendry. The contrarian Scotsman, who describes his style as one where he "positions ourselves outside the accepted belief system", managed to say in 15 minutes what takes most pundits hours, and that's without the appendices, charts, long-winded essays, and graphs. Because when it comes to conveying ideas, simplicity always wins, and few are as good at speaking in simple, logical terms, as Hugh Hendry.

Some of the higlights from the one-time self-professed goldbug's speech:

  • "10-12 years ago I became a gold bug and launched my hedge fund in the end of 2002, and in 2003 we made 50%. By and large that was from gold beginning to gain some momentum."
  • "When Citigroup and other banks started to endorse very high prices on gold, you needed the intervention of paradox"

In 2006 Hendry flipped, got out of gold on the expectation that something “profoundly bad” would have to happen for gold to rise to $3000, and as Lehman was collapsing he made another 50% in October 2008 by going long the long bond on expectations of outright monetization of the long-end of the curve by the Fed. And that is the kind of fat tail return that suffering a consistent slow-bleed theta for years makes it all worthwhile in the end (also see: Kyle Bass, despite the dins and the jeers of the journalism major crowd).

Other observations include the monetary impact of global mercantilism, where every country is desperately trying to crush its currency, which to Hendry means the possibility of a massive FX short squeeze is increasing.

Hendry says that $3 trillion in Fed monetization has not unleashed inflation. Yet. What would? It would be “another trillion number” which would come when the central bankers no longer fear that their legacy would be of those ushering in Weimar 2, which means an opportunity cost of even greater catastrophe. "Society is saying we need the most profound Lehman times X in order to allow the central banks to cross my Rubicon, to be revolutionary, and they can be only revolutionary when they have given up hope.” In other words things have to get so bad, deflation has to be such a threat, that everyone goes thermonuclear on their CTRL-P buttons.

He summarizes the macroeconomic situation which he sees as juxtaposing the “green shoots” in America, is offset by the “theater of the absurd” in Europe, but as usual focuses on his favorite macroeconomic topic: China: “Like Germany, they have been an operationally leveraged economy, but unlike Germany, have now adopted financial leverage- the sovereign financing of these unproductive investments, so now they have double jeopardy, and if we don’t have a sustained economic recovery I am very fearful of the events that may befall the Chinese.”

Next, Hendry touches on the politically sensitive topic of China selling US Treasurys, which he thinks is ludicrous, explaining that "US Treasuries are not an asset you can’t sell it to protect yourself", because selling TSYs would lead to a surge in the renminbi, which in turn would crush Chinese exporting companies.

The bottom line for China, "whose medicine is its poison" is that it has little recourse: it can’t protect itself in a downside case with its $3 trillion in reserves, or by selling Treasurys, and on the other the impact of financial leverage would magnify any economic crash: “UK GDP peak to trough dropped 8%. In the US in 1931 it dropped 23%. That’s the leverage. Now am I sitting here with video cameras saying the Chinese economy is going to contract 23%? Of course not. But if we have coffee later, I may say something different.”

Then from the Q&A we learn the following:

Hendry is long gold and short the S&P. "It was a great trade until 2008." It has been “profitably but less predictable” since the intervention of QE in 2009. “there is an observation that QE has fortified the S&P versus the performance of gold.”

For the edification of those caught in the endless debate of gold vs gold miners, he says: "I am long gold and I am short gold mining equities. There is no rationale for owning gold mining equities. It is as close as you get to insanity. The risk premium goes up when the gold price goes up. Societies are more envious of your gold at $3000 than at $300. And there is no valuation argument that protects you against the risk of confiscation. And if you are bullish gold why don’t you buy gold ETFs, gold futures or gold bullion.”

And his brilliant conclusion: "I have resigned from the professional undertaking of coin flipping. I am not here to tell you where gold’s going to be. I have no idea. That’s my existentialism. I am a student of uncertainty, I have no idea where the stock market is going to be. So when I am creating trades in my portfolio for my clients, I am agnostic. I just want to enhance the probability that I make money come what may."

It would be so great if the empty, hollow, talking heads (especially those who have been wrong by so much more than 50% in the recent past) on the business stations admitted the same. However without them, the CNBCs of the world would immediately go bankrupt. And where would all those companies advertise during daylight hours and needing a somewhat wealthy audience turn to then?

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Thu, 10/25/2012 - 14:54 | 2919300 Dixie Rect
Dixie Rect's picture

gold, silver and FAZ, bitchez

Thu, 10/25/2012 - 15:01 | 2919327 Blasé Faire
Blasé Faire's picture

The thieves in France are starting to catch on.  They've begun snatching gold necklaces in record numberrs in "muggings aimed at cashing in on the rising price of the precious metal."

In July over 635 gold muggings were reported in the Paris area alone.  Buy physical and keep it in a vault.

Thu, 10/25/2012 - 15:04 | 2919333 Pladizow
Pladizow's picture

I aws going to take off my shorts, but I may scare someone with my naked long!

Thu, 10/25/2012 - 22:45 | 2920531 Oracle of Kypseli
Oracle of Kypseli's picture

I am wondering what ratio of short S&P to long Gold Hugh is using!

Hugh, please give us a hint.

Thu, 10/25/2012 - 15:25 | 2919391 krispkritter
krispkritter's picture

This guy robbed a bank, literally, and ended up with a £$51k refund because gold went up in value:


Fri, 10/26/2012 - 18:14 | 2922807 hamstercheese
hamstercheese's picture

He robbed a bank in Vienna in 1993 and was handed British pounds??

Thu, 10/25/2012 - 15:39 | 2919414 slackrabbit
slackrabbit's picture


Classic ecnomics...the person closest to the problem knows the solution.....likewise the black market.

Thu, 10/25/2012 - 16:34 | 2919612 Dr Benway
Dr Benway's picture

On the note of classic economics, have you noticed how fewer people seem to wear gold jewellery these days? I mean, walking on the street you just seem to see less gold. Maybe its changing fashion but surely price plays a role

Thu, 10/25/2012 - 16:44 | 2919670 Zero Govt
Zero Govt's picture

it's more trendy to be seen walking down the High Street with a Cost-Co sale bag today than a Versace (or Louis Vitton handbag)

I think the same goes for jewellry, Gold and bling-bling replaced with studs and chains. And with times as they are quite simply you also don't want to attract muggers

Thu, 10/25/2012 - 15:23 | 2919385 RmcAZ
RmcAZ's picture

Short FAZ, you mean? FAZ going to zero regardless of what financial stocks do.

Thu, 10/25/2012 - 16:06 | 2919507 CPL
CPL's picture

Leveraged decay is a cruel mistress.


The Fed and all the rest of the jack asses are learning that now.  Retail traders are well aware of the nonsense.

Thu, 10/25/2012 - 21:33 | 2920387 fourchan
fourchan's picture

made aware the hard way.

Thu, 10/25/2012 - 17:56 | 2919954 Spitzer
Spitzer's picture

this is a crock from Hugh.

the average person doesnt give a flying fuck what the price of gold is. Is he not going to hold oil companies beacuse oil has been going up ? They even had the oil execs in front of congress  and the stocks did fine.

Miners went up like crazy in the great depression and in the inflation in the eighties.

this time is diffrent Hugh ?

Thu, 10/25/2012 - 15:53 | 2919462 jballz
jballz's picture


FAZ? Fuck FAZ.  When are you people going to learn you are paying a slow bleed of a ridiculous trading vehicle? 

Just short the fuckin sp. It isn't that complicated.

Thu, 10/25/2012 - 16:07 | 2919513 CPL
CPL's picture



It's already leveraged to the tits, putting a X3 multipler on that makes it impossible to play with safely.

Thu, 10/25/2012 - 15:59 | 2919483 Silver Bug
Silver Bug's picture

More words of wisdom from Hugh Hendry! Gold is the place to be.

Thu, 10/25/2012 - 18:00 | 2919959 Spitzer
Spitzer's picture


The US dollar has been falling for ten years yet its exports fell too.

the euro went to one fifty from eighty cents in ten years and german exports rose.

he doesnt know what hes talking about

Thu, 10/25/2012 - 14:55 | 2919301 Badabing
Badabing's picture


Thu, 10/25/2012 - 14:58 | 2919315 FL_Conservative
FL_Conservative's picture

I'm glad to know that Hugh Hendry is in the same boat as me.

Thu, 10/25/2012 - 15:19 | 2919374 JPM Hater001
JPM Hater001's picture

Give him a hug for me will ya.

Thu, 10/25/2012 - 16:10 | 2919527 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Now hope there isn't going to be a boating accident

Thu, 10/25/2012 - 16:18 | 2919550 Silver Pullet
Silver Pullet's picture

Beat me to it.

Thu, 10/25/2012 - 16:48 | 2919691 FL_Conservative
FL_Conservative's picture

It was hard to watch my investment go further red because of my commitment to my investment thesis, as well as continuing to average "down" as QEx comes out and stocks take the little blue pill.  But I'll be the one smiling if we get anywhere near the March 2009 lows.  That will be a lot more cash to buy gold with.

Thu, 10/25/2012 - 15:03 | 2919302 TruthInSunshine
TruthInSunshine's picture

As Michael Burry and many others have proven, timing is important, but doesn't have to be perfect, so long as one's model implements reasonable staying power (Taleb is a master at this, profiting rarely but massively at the occurrence of outsized events).

The Bernanke "put" will inevitably turn out to be the mirage it's always factually been, just as each and every central bank "put" preceding it has been, whether purporting to backstop equities or the housing market, but most won't realize it until the damage is done.


Thu, 10/25/2012 - 18:15 | 2920002 Spitzer
Spitzer's picture

why do you think he has a sound model ?

he invests with his dick. 

shorting miners ?

how well did that work in the great depression ? Google Homestake mining , check out the charts 

Fri, 10/26/2012 - 04:00 | 2920835 mkkby
mkkby's picture

You make some good points, but I agree with Hugh.  Miners help the banks lease/short their own product, which means they are stupid.  And oil is their biggest expense, which is why they never seem to make much profit.

I don't even like far OOM spy puts, because Eurpope/Jap/UK will die first and slowly - pushing lots of scared money into US paper anything.   All roads lead to printing - so we know physical gold is the best put.  Even if you make money in paper products, you've got the Corzine effect to worry about.


Thu, 10/25/2012 - 14:56 | 2919307 Cognitive Dissonance
Cognitive Dissonance's picture

"I have resigned from the professional undertaking of coin flipping. I am not here to tell you where gold’s going to be. I have no idea. That’s my existentialism. I am a student of uncertainty, I have no idea where the stock market is going to be. So when I am creating trades in my portfolio for my clients, I am agnostic. I just want to enhance the probability that I make money come what may."

Or as the case may be...........preserve the "value" of what money I've already made.

Thu, 10/25/2012 - 14:57 | 2919312 fuu
fuu's picture

Total man crush.

Thu, 10/25/2012 - 15:53 | 2919464 vix is for kids
vix is for kids's picture

If some random guest on CNBC said exactly what Hendry said

I don't know where the stock market will be

where gold will be

own paper over physical gold

sell miners

I'm an existentialist

.......we here would ridicule him as just another shill playing with OPM.  No man crush here.

Thu, 10/25/2012 - 16:07 | 2919511 fuu
fuu's picture

No we would celebrate the breath of fresh air displacing the miasma of the usual CNBullShit.

Thu, 10/25/2012 - 14:58 | 2919314 valkir
valkir's picture

Day after day i am more confident,than even gold wont save me and my family.I wonder why i still kick my but and go to work every day.

Thu, 10/25/2012 - 16:43 | 2919666 Sigep0612
Sigep0612's picture

Just develop a plan.   It doesn't have to elaborate.  Me?....My plan is Costa Rica.  I've investigated all the pieces of my plan.  28 hour drive from Chicago.  Heading to Arenal.  Places to live. Food sources.  Fresh water. It's simply a plan in case the US begins to fall apart.   In Oct 1929 as the stock market began to crash,  many were saying "it will come back..."   Do you want to be caught in that boat?

The hard part is knowing when to pack the car and leave.  If there is a major event, (stock market crash, run on banks, civil unrest, major gas or electric shortage) start your engine.  Implement your plan.  If you're can always come back.  But if you're'll be safe.  One major caveat, you need to stay at your end point for a minimum of 3 weeks.  It's simply a plan.  You can sit there an think ...this guys is nuts cause things couldn't possilby go that wrong in the good old USA.  Or you can document your plan,have you're family buy into it or you can starve, be killed by the rioters or robbed of all your possesions.      

Think of this.  I recently asked a Super Market Manager how long the food would last on their shelves if no trucks delivered goods to the store.  His reply "3 days max."  What happens then..?  You tell me what it looks like.   

Thu, 10/25/2012 - 16:53 | 2919721 Zero Govt
Zero Govt's picture

Sig  -  great you've thought about Plan B and magnificent you've walked it through all the way to car journey to Costa Rica. Regards knowing when it's time to leave, you'll just know

One fear to put to bed is regards rioters, people do not attack others for no good reason. Joe Public has no fear from protestors/rioters, though the MSM will over-blow every incidental event of such to drive a wedge of fear to make revolutionaries 'the enemy' when it's the Govt and MSM that are the real subversives of society. 

Thu, 10/25/2012 - 17:09 | 2919808 americanspirit
americanspirit's picture

Hi Sig - the reason I don't like Costa Rica or anyplace else when the US begins to come apart is that when that happens those jurisdictions will feel absolutely 100% safe in simply taking foreigners assets and dumping their bodies in the ocean or anyplace convenient. In fact I am totally sure that this is completely pre-planned. Once they know they can get away with it, it will happen. For that reason alone I choose to stay in the US, but in a place where I am surrounded by like-minded armed and ready people. No place is perfect, but most places outside the US will be much less perfect than the right place inside the US when this government and economy collapse. IMHO

Thu, 10/25/2012 - 17:41 | 2919921 Just Ice
Just Ice's picture

Yeppers, foreigners always make great scapegoats.

Thu, 10/25/2012 - 18:35 | 2920046 Zero Govt
Zero Govt's picture

AmericanSpirit - do you know of any examples of fleeing emigreys being taken advantage of?

i'm sure there's a few out of 1,000's picked off but humans the world over are very civil. You wouldn't take advantage of someone leaving a tyranical State, you'd help out, most people would  

Thu, 10/25/2012 - 18:49 | 2920072 bunnyswanson
bunnyswanson's picture

It's a valid concern.  History tells us what group hate and a mob mentality can result in. Replace "Jewish" with "American" please.


What happened to Jewish property during the Holocaust? I know it was confiscated, but was it re-distributed to non-Jewish German civilians or kept for the Nazi Party.

Best Answer - Chosen by Voters

It was confiscated by the Nazis to pay for the war. For example, if they had gold in their teeth, before they were sentenced to work in the camps or die, they would pull out the gold from their teeth. Also, precious gems were taken and given in payment for weapons and the like. It was kept mainly by the Nazis and used as payment but never given back to Jews until after the war if they were lucky. Also, sometimes the gems would be kept by the soldiers who took them for personal use.

October 1938

The Polish government revokes passports of all Jews who have lived outside of Poland for more than five years, rendering them stateless.

Civiltá Cattolica, the foremost Jesuit journal, which is published in Rome and controlled by the Vatican, calls Judaism sinister and accuses Jews of trying to control the world through money and secularism. The journal says that the devil is the Jews’ master; Judaism is evil and “a standing menace to the world.”

October 1-10

The German Wehrmacht occupies the Czech Sudetenland under stipulations of the Munich Pact.

October 5

Following a request by Heinrich Rothmund, head of the Swiss federal police, the German government recalls all Jewish passports and marks them with a large, colored “J.” This is to prevent German Jews from passing as Christians and smuggling themselves into Switzerland.

October 8

The Slovak Peoples’ Party establishes Hlinkova Garda (Hlinka Guard), an antisemitic militia that will collaborate with the Germans.

Thu, 10/25/2012 - 19:45 | 2920191 123dobryden
123dobryden's picture

jews could have avoid the holocaust if only they had paid more attention to their mouth hygiene and to store their gold in there...

Thu, 10/25/2012 - 21:38 | 2920400 Zero Govt
Zero Govt's picture

Bunny  -  the issue was Americans fleeing the US ...the Jews were mobbed and bullied in their own country, Germany... any Jews escaping the Nazis generally got good treament in the foreign countries they reached

his point which I questioned was fleeing Yanks would get robbed and thrown in the sea in a place like Costa Rica ...people aren't like that the world over, we're overwhelmingly helpful in such situations

Fri, 10/26/2012 - 04:03 | 2920837 mkkby
mkkby's picture

Zero G:  how many times have you heard people say they pretended to be Canadian because foreigners didn't like Americans? A lot. We all have.  Now imagine that when they're hungry and they heard those "assholes" got rich off their backs.

Thu, 10/25/2012 - 17:19 | 2919856 Just Ice
Just Ice's picture

That's either a typo or you might want to recheck the "28 hour drive" part...

Thu, 10/25/2012 - 19:48 | 2920200 kekekekekekeke
kekekekekekeke's picture

ha ha ha right?  I took a bus from Honduras to Costa Rica once.  Three fucking days

Thu, 10/25/2012 - 21:31 | 2920383 FEDbuster
FEDbuster's picture

Maybe he used Google maps?

Sat, 11/03/2012 - 19:34 | 2945204 dvfco
dvfco's picture

I love the fact that you plan, but Costa Rica isn't 28 hours by car from Chicago.  The rape and murder of your first family members and probably all of you will by 28 hours from Chicago (at most.)  Where would you plan to cross the border into Mexico,  Nuevo Loredo?  You can have dinner with some members of the Zetas who kill about 40 people per day along border towns.  Then, the ride through Monterrey and onward should be really nice.  Mexico, these days, has 1/2 the cities in the top 50 of those with the highest murder rate in the world.  (I know, you live in Chicago, so you're used to murders and really sleazy government - Rahm, Obama, etc. - so you might fit in well in Mexico.)

However, assuming you can get through Mexico unharmed, which I would think you'd have about a 5% chance of doing, you eventually have to choose whether you go through Honduras (highest murder rate in the western hemisphere) or El Salvador (nice guys nicknamed MS-13 will help you if you need anything), etc. 


You literally have picked what might be the most dangerous drive in history - like the Canonball Run from hell.   Maybe try to leave a day early and fly?  Good luck either way.

Thu, 10/25/2012 - 14:58 | 2919317 Hohum
Hohum's picture

What?  I want CERTAINTY, Hugh Hendry!

Thu, 10/25/2012 - 14:58 | 2919318 TideFighter
TideFighter's picture

Off target here but...I have a buddy on Cuba reporting 141 mph winds near GITMO. "Sandy" is going to be a bruiser, and looks likely to hit NE Coast. Prepare early.

Thu, 10/25/2012 - 14:59 | 2919320 kliguy38
kliguy38's picture

Go ahead and throw your stones at Hendry but he knows the lever pullers......keep your fochin paper can eat paper I guess

Thu, 10/25/2012 - 15:04 | 2919334 fonzannoon
fonzannoon's picture

"And there is no valuation argument that protects you against the risk of confiscation. And if you are bullish gold why don’t you buy gold ETFs, gold futures or gold bullion.”

That's kind of garbage.

Thu, 10/25/2012 - 15:26 | 2919376 JustObserving
JustObserving's picture

Exactly. You can lose your money in a gold ETF in many ways. Here are the details:

"If you buy shares in a gold ETF like the GLD, for example, which is the largest gold ETF in the world, do you actually owngold? The answer is no," says Lauren Lyster of "Capital Account" (starting at minute 2:50). 

"You're effectively buying shares in a fund indexed to the goldmarket. This is not the same thing as buying physical goldbullion and storing it in allocated vaults. This is a key distinction. In fact, according to the ETF's own prospectus, the average investor can only redeem their gold shares for cash. Only those who have very large holdings in a fund like GLD have the option to redeem their shares for physical gold. This requires somewhere in the neighborhood of 100,000 shares, which translates into millions of dollars, and even then it's a difficult process. 

"Also, in the case of GLD, let's take a look at the prospectus, because the trust does not insure its gold, which means it may not have adequate sources of recovery if its gold is lost, damaged, or stolen or destroyed. And this may surprise you when reading the prospectus, as we have: The amount ofgold represented by the shares will continue to be reduced during the life of the trust due to the sales of gold necessary to pay the trust expenses irrespective of whether the trading price of the shares rises or falls in response to changes in the price of gold.  

"Wait a minute: The so-called pot of gold shrinks? What kind of deal is that? And finally, one more look at the prospectus because 'gold held in the trust's unallocated gold account and any authorized participant's unallocated gold account will not be segregated from the custodian's assets. If the custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the trust or any authorized participant.'

"Now that may sound confusing, but in basic English, sounds like if the custodian -- in this case HSBC -- runs into trouble, it may not be able to make good on your claim. "

Thu, 10/25/2012 - 16:21 | 2919561 ZeroAvatar
ZeroAvatar's picture

"Wait a minute: The so-called pot of gold shrinks?


And there you have it:  the pot of gold SHRINKS!  And Mary had a little LAMB!



Thu, 10/25/2012 - 16:25 | 2919579 RockyRacoon
RockyRacoon's picture

That means that they count "your gold" as "their asset".   What could possibly go wrong?  Ask Corzine.

Thu, 10/25/2012 - 16:54 | 2919731 forwardho
forwardho's picture

Or... whats mine is mine, and whats yours is mine. Heads I win, tails you looze. (Un-intended coin metaphore)

Thu, 10/25/2012 - 15:23 | 2919382 JPM Hater001
JPM Hater001's picture

Yes, because Nationalization has never happened and all the mines are here in America where we would never do something like confiscate personal property.

What fairyland do you live in?

Thu, 10/25/2012 - 15:53 | 2919463 slackrabbit
slackrabbit's picture

You can have physical and when / if the government pronounces the law / confiscation - the cops have ALREADY kicked in your door like Germany did in the late 1930's. When the law was being announced on radio, the cops and the army were already kicking in your door!

If you have gold or gold etf or gold shares - the same applies.

We can’t beat an army in either case.

All we can do - is watch closely - warn our friends - sell if the gold shares’ /etfs IF the prices ARE high / MAYBE sell SOME physical (probably in another currency) for cash - AND RUN LIKE SHIT!

We all know we can't fight an army, but what we can do is hope for the best, prepare for the worst....

Thu, 10/25/2012 - 16:20 | 2919512 slackrabbit
slackrabbit's picture




In case ZH readers are reading what I said the wrong way let me be clear.

1. I don’t not TRUST  gold / silver ETFs

2. I do like PM in my hand and i have some

3. But I also like mining shares

4. I know that if the s**t goes south and the TPTB want to confiscate...IT WILL NOT make it to the news UNTIL AFTER its over:

 (watch Hitler:The Rise of Evil. While people were listening to the public announcement / recording, the armed forces had already (or were) kicking in doors of 'terrorists and enemies of the state and people'). By the time the recording was played on public radio it was already done!

In which case its Fema camp 101 for you anyway

5. Have grab bag ready.....and NO I AM NOT JOKEING!


Thu, 10/25/2012 - 16:31 | 2919595 RockyRacoon
RockyRacoon's picture

Keep your personal stash (what's left after that tragic boating accident) in 2 separate locations, and in 2 separate amounts.  If forced at gunpoint/knife-to-throat to cough up your holdings you can reluctantly lead them to the smaller hidden cache and plead for your life that that's all you have left.   PLEEEEZE don't take my family's only means of survival kind sir!  We'll starve in the streets!   ... then chuckle as they drive away ... if they don't outright kill you for sport.

Thu, 10/25/2012 - 16:38 | 2919638 slackrabbit
slackrabbit's picture


Never thought of that. 


Fri, 10/26/2012 - 04:06 | 2920842 mkkby
mkkby's picture

Anybody know a source of gold plated tungsten coins that can be surrendered to theives, or gov confiscators?  Here, officer - take my gold and see what a good citizen I am.

Thu, 10/25/2012 - 16:36 | 2919624 Chupacabra-322
Chupacabra-322's picture

@ slackwabbit,

Confiscation?  That's why I'm long on Guns and lead. 

Thu, 10/25/2012 - 16:40 | 2919650 slackrabbit
slackrabbit's picture

Me too.

(my family thinks I'm crazy. I am )


Thu, 10/25/2012 - 17:51 | 2919949 hawk nation
hawk nation's picture

I have the same reaction frommy family

Normality will not allow them to look objectively at what is going on

I mistakenly told a family member that when the shit hits the fan they should stay away from a few of their family members that are in politics if they want tostay alive

Thu, 10/25/2012 - 19:13 | 2920124 tsx500
tsx500's picture

one glaring difference that instantly comes to mind...we've got 'instant news'  i.e.  social media: twitter , FB       .      all they had back then was radio.   would it make a big difference ?    who am i to say ......

Thu, 10/25/2012 - 16:13 | 2919535 HungryPorkChop
HungryPorkChop's picture

In the 1970's when gold shot up to over $800 some of the miners went exponential.  Sure gold went up 300%, 400% in a couple years but some of the mining stocks went up 1,000% to 3,000%. 

Gold is a great place to be but the correctly picked mining stocks could be a lot more profitable.  Just sayin'.

Thu, 10/25/2012 - 16:35 | 2919608 slackrabbit
slackrabbit's picture


Agree, and Jim Sinclair made a ship load.

But Hugh Hendry is speaking sardonically.  

What he is saying, is that 'if ANY government are  going to steal your gold / gold shares - then there's not much you can do about it'

What he means is (and he has said this before) - you won't find out till AFTER its happened! 

You will wake up one morning, turn on the Tv / radio and

‘oh by the way, your PM  / money are now ours because its a crises and we have to save the little guy and his family ...blah blah blah'.

Do you think the parasites are going to give shit about you?

We have to jump ship before THAT announcement and transfer it / convert it  AND THEN RUN LIKE HELL!




Thu, 10/25/2012 - 17:08 | 2919803 Zero Govt
Zero Govt's picture


You have to prepare, be 1 step ahead, even better try to be invisible to Big Govt, not hard really.

Another point is Big Govts weaknesses are massive. If it hits the 'confiscate' button it's a big dinosaur chasing 1,000's of people. If Thug raids your home it's a 1-hit wonder. Govt hasn't the time to spend investigating you endlessly, like the police they need instant results or they have to move on

make sure your house is clean and clear ...make em leave empty handed, very doubtful they'll come back as Govt Thug has 1,000's of others on the hit-list and only 6 hours in the day to do it

Thu, 10/25/2012 - 15:08 | 2919343 LawsofPhysics
LawsofPhysics's picture

I hope he is long physical gold because there are plenty of paper promises on delivering all kinds of things that won't be met.  Including gold.

Thu, 10/25/2012 - 15:15 | 2919357 i love cholas
i love cholas's picture

This is my #2 man crush just behind Jim Grant.

Thu, 10/25/2012 - 17:35 | 2919906 I think I need ...
I think I need to buy a gun's picture

mine are kyle bass and peter schiff

Thu, 10/25/2012 - 18:56 | 2920092 i love cholas
i love cholas's picture

I admire Schiff, but I don't think I could get a word in edge wise

Thu, 10/25/2012 - 19:16 | 2920133 tsx500
tsx500's picture

mine are  Kyle Bass , and that guy that just free-fell from 128k feet .

Thu, 10/25/2012 - 15:15 | 2919360 Essential Nexus
Essential Nexus's picture

So he's concerned about Gold mining confiscation, but not about ETF rehypothecation of gold? Go figure.

Thu, 10/25/2012 - 15:16 | 2919361 Zola
Zola's picture

As opposed to paper ETFs , i'd rather have miners thank you Hugh. When it comes to physical gold, that can be discussed, but with a negative carry on the physical , if the miners pay 3/4%+ dividends, they should be better long term.

Thu, 10/25/2012 - 15:48 | 2919449 ruffian
ruffian's picture

No sarcasm has that worked out for you? Miners have not worked out well for me........

Thu, 10/25/2012 - 15:17 | 2919365 Quinvarius
Quinvarius's picture

Commence emergency S&P ramp in 3...2...1...

Thu, 10/25/2012 - 15:33 | 2919371 Supernova Born
Supernova Born's picture

Existential, agnostic, students of uncertainty harken Hugh's non-flippage of coin.

Thu, 10/25/2012 - 15:18 | 2919372 A_S
A_S's picture

owning gold equities is as close to insanity as possible


hugh hendry

Thu, 10/25/2012 - 15:22 | 2919380 fonzannoon
fonzannoon's picture

I own gold equities. I own them because I think there is still a period ahead where gold will increase and the equities will be one of the only sectors to have incredible earnings growth. The key is knowing when to ditch them before gold explodes and they are all nationalized. I have no idea when that is, but I think there is still time.

Thu, 10/25/2012 - 15:41 | 2919423 Al Huxley
Al Huxley's picture

I agree, even though they're dangerous and unpredictable, and fundamentally, the large caps don't seem to be very well run - you'd think they could figure out a way to make a lot more money in the context of the current global environment, but they must be either in on the whole scam, or they're so narrowly focused on mining and engineering that they lose sight of the bigger picture.  That said, the juniors are prone to bouts of insane, manic upside moves, and it seems prudent (in fact it would seem consistent with Hendry's professed strategy) to have some upside exposure to those kind of 'semi-predictable positive black swan events'.

Thu, 10/25/2012 - 17:12 | 2919811 Oldrepublic
Oldrepublic's picture

Ron Paul’s portfolio: Lots of gold, silver and Canadian junior miners
Thu, 10/25/2012 - 15:24 | 2919386 Peter Pan
Peter Pan's picture

The threat of confiscation is gold's best valuation basis. After all, why would they confscate something which is not of value?

Thu, 10/25/2012 - 15:54 | 2919470 bernorange
bernorange's picture

Because they are hungry.

Thu, 10/25/2012 - 15:36 | 2919410 negative rates
negative rates's picture

What if the cliff arrives, the dry powder liquidity has plenty of supply, but the capital to buy it has 180'd, and now you have no cash in a pinch. The scales of justice have yet to be heard from.

Thu, 10/25/2012 - 15:37 | 2919411 vix is for kids
vix is for kids's picture

I'm a bit disappointed in Hendry's remarks. "I made a pile in the past, expect to make more in the future, but I can't tell you how".  Even his "own gold" message is full of caveats, ie. "I don't know where it is going, or when," and "physical may be confiscated, so own paper". WTF?

Thu, 10/25/2012 - 15:42 | 2919430 Al Huxley
Al Huxley's picture

I find it really refreshing to find somebody who'll actually admit he can't really predict with a great deal of certainty what the future holds, and is willing to tell you he's just taking his best shot at guessing, and will change strategies if it turns out he's wrong.  No wonder he makes money.

Thu, 10/25/2012 - 15:55 | 2919474 paint it red ca...
paint it red call it hell's picture

Hendry is talking his book. He certainly may well be short miners today as he says in front of that camera.

But afterwards over coffee would he say something different as he indicated he could say something different about a Chinese contraction?

Smart guy that knows full well how the game is played......

Thu, 10/25/2012 - 16:07 | 2919515 Supernova Born
Supernova Born's picture

Hugh is certainly disappointing in his lack of willingness to say much.

Did his exchange with Liam Halligan on CNBC really change him so profoundly?

Thu, 10/25/2012 - 17:54 | 2919952 sherryw
sherryw's picture

I read he thinks the Chinese will indeed suffer a major contraction.

Thu, 10/25/2012 - 15:43 | 2919434 dolph9
dolph9's picture

I ask myself every day if I should own mining stocks.  It's cost me alot.

But I think I'm slowly coming around to the idea of owning them until there's a mania, and then dumping and running off with the physical metal alone.

I want everybody and their grandma and their dog to be talking about mining shares.  I want to see those muppets get excited, and then I can sell to them.

Thu, 10/25/2012 - 15:47 | 2919444 Al Huxley
Al Huxley's picture

Yes, that's the strategy.  Of course, its really painful during the non-mania stage, but if you do eventually get the mania, it makes up for the pain.

Thu, 10/25/2012 - 16:24 | 2919576 XitSam
XitSam's picture

You're expecting that by the time mania comes, physical will be underpriced relative to miners?

Thu, 10/25/2012 - 15:43 | 2919435 Supernova Born
Supernova Born's picture

I would like to know who is teaching uncertainty and to see the syllabus.

Thu, 10/25/2012 - 15:54 | 2919469 XitSam
XitSam's picture

I'm with Hugh.

Thu, 10/25/2012 - 16:10 | 2919526 Honey Badger
Honey Badger's picture

Quote from the interviewer at 5:27:  “You people who are gold bugs often stay gold bugs, you know, to their death with their hold up with their guns in Idaho…”


My quote, “Damn fucking straight, bitchez.”

Thu, 10/25/2012 - 16:35 | 2919614 RockyRacoon
RockyRacoon's picture

There's a difference between "holed up" and "hold up".  Look it up.... bitchez.

Thu, 10/25/2012 - 16:44 | 2919672 Honey Badger
Honey Badger's picture

I here you, I was wondering weather to use holed up, than I thought hold up.  Better?  :)

Sun, 10/28/2012 - 22:06 | 2926508 RockyRacoon
RockyRacoon's picture

You are forgiven! Well done. Carry on.

Thu, 10/25/2012 - 16:13 | 2919533 BeetleBailey
BeetleBailey's picture

Steve Liesman, the boob jester of cnbc, was also at this Buttonwood/Economist conference.

I would like to think if he bumped into Hendry, that Hugh would have slyly kicked his little grape sized balls in with a Scottish leg-roundhouse, when fat boy wasn't looking....

Thu, 10/25/2012 - 16:18 | 2919552 Scalaris
Scalaris's picture


Decorously unpretentious.

"I have no idea. That’s my existentialism. I am a student of uncertainty, I have no idea where the stock market is going to be. So when I am creating trades in my portfolio for my clients, I am agnostic."

 Every financial industry (coin flipping) professional's motto (or what it should have been )

Thu, 10/25/2012 - 16:24 | 2919575 Tombstone
Tombstone's picture

With so many countries stocking up on gold reserves, why is not the price of gold zooming to the heavens?  Is Benny giving them free gold too?  Looks to me that the central banks are somehow controlling the price of gold and silver.  It just means that the slave class will have to rely on big gov to provide all things.

Thu, 10/25/2012 - 16:38 | 2919637 RockyRacoon
RockyRacoon's picture

You really need to subsribe to Ed Steer's daily column:

You'll understand all about that Big Bank manipulation!


Thu, 10/25/2012 - 17:50 | 2919947 sherryw
sherryw's picture

You also need to read Jim Sinclair's site; Scroll back about four days and read forward.

Sun, 10/28/2012 - 22:07 | 2926513 RockyRacoon
RockyRacoon's picture

It appears that someone (or thing) doesn't like our suggestions.   Hmmm.

Fri, 10/26/2012 - 01:00 | 2920698 Lord Koos
Lord Koos's picture

I've thought about this quite a bit and it seems to me that one reason the PM prices are controlled that it gives some of the more gold-poor countries such as China, etc, the chance to play catch-up to the Western nations who (allegedly) are gold-rich, before the price gets totally out of control. Levelling the playing field in this way may help avoid some wars in the future... perhaps this is what the elites are thinking.

Thu, 10/25/2012 - 16:34 | 2919603 Oldrepublic
Oldrepublic's picture

David Morgan thinks that when silver gets to around $75/oz, then penny mining stocks will be very popular.Price could go from 18 cents to $1.80 very quickly.He thinks that so called late to the party people in regards to buying silver will jump at cheap silver penny stocks. "People love cheap stocks," according to Morgan

Thu, 10/25/2012 - 16:34 | 2919610 hustler etiquette
hustler etiquette's picture

There are two things in this world I'm in awe of. Formula 1 and Hugh Hendry.  Now if only there was a way to combine the two in one setting

Thu, 10/25/2012 - 16:52 | 2919709 q99x2
q99x2's picture

That was nice. He had to exit stage right instead of stage left as his mind continued on what he had said. A little stuffy.

Thu, 10/25/2012 - 17:58 | 2919958 Tango in the Blight
Tango in the Blight's picture

I wish I had bought gold in 1999. I had Microsoft stock then stupidly put them in Asian tiger economy stocks prior to the Asian crash in 1997. What did I know back them was too young to have a clue. :S

Thu, 10/25/2012 - 21:53 | 2920435 jerry_theking_lawler
jerry_theking_lawler's picture

in late 90s...i had an employee (older man) who bought a gold coin EVERY week, usually 1 oz. he tried to explain its intrinsic value and what real money was. i would sit and look at that shiny, flat, lifeless piece of metal on my desk and would laugh. i would ask him, will it return 8% annually like my Worldcom??

guess who is laughing now.

Thu, 10/25/2012 - 18:47 | 2920062 Supernova Born
Supernova Born's picture

Hugh Hendry is to investing what David Lynch is to filmmaking.

Thu, 10/25/2012 - 18:51 | 2920082 ZH11
ZH11's picture

He has the words vague and insincere over his left shoulder.


Is this relevant?

Thu, 10/25/2012 - 20:51 | 2920316 yabs
yabs's picture

Not sure about some of his analysis

How can holdfing gold miners be insanity that are leveraged to the rpice of gold?

makes zero sense

Also his statmenet  about inflation is ludicrous

he like Mish seems to equate inflation to the increase of credit

to nor mal people inflation is just how much things cost and the price of living

are food and energy prices more or less than 2009 Hugh?

Thu, 10/25/2012 - 21:21 | 2920367 Cosimo de Medici
Cosimo de Medici's picture

Nothing is more clear, after watching a number of these speakers, than the fact that QE benefits no one except the upper edge of the population.  They all but admit it.  Perhaps one cannot blame them for reading the writing on the wall and playing accordingly, but what is happening----and will continue to happen for the foreseeable future---is that the money players get more free money plus the road map as to where Bernanke and other CBs are heading, and the vast Middle gets austerity.  So long as everyone from Greeks to Spaniards to US workers are willing to accept austerity---perhaps blowing off a little steam on the way to resignation to their accident of birth---it's biscuits and gravy for the upper crust.  Bernanke et al will never stop.  Some will argue that this is the plan.  Others will aver that they won't stop both because they are incapable of admitting they are wrong, and because they have created a positive feedback loop where their models tell them their models are working.

Nobody can say when it is all going to blow up (as Hendry admitted), but as Einhorn implied, there will be no economic recovery until the end of ZIRP-e-QE-ty, if even then.

Thu, 10/25/2012 - 22:15 | 2920482 Michigan
Michigan's picture



Sounds like the easiest job in the world.


"I don't know where anything will be, but hold it in Gold. That will be 100mm/year please"

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