Wall Street Journal
October 26, 2009

Odd Couple:  Stocks, Gold Share Same Ride Higher

•    David Einhorn, who oversees about $6 billion at New York hedge fund Greenlight Capital, last week told a New York investment conference that, before the financial crisis began in earnest last year, he shared the skeptics' view of gold as a metal of little intrinsic value outside dentistry, jewelry and some specialized electronics uses.  "The recent crisis has changed my view," he said.

•    "My instinct is to want to short the dollar," Mr. Einhorn said, "But then I look at the other major currencies.   The euro, the yen and the British pound might be worse.  So, I conclude that picking one of these currencies is like choosing my favorite dental procedure.  And I decide holding gold is better than holding cash."  He has been buying gold since last year, as have a number of other managers of large hedge funds.

•    John Paulson, the hedge-fund manager who made a fortune betting against subprime mortgages and financial companies, who oversees about $29 billion, has become a major gold investor in the past year using an exchange-traded fund that tracks gold, regulatory filings indicate.

•    Marc Stern, who helps oversee $55 billion as chief investment officer at Bessemer Trust, has about 1% of those assets, or $550 million, in gold as part of a hedge against future inflation, along with other anti-inflation investments

•    Gold has done well in periods of economic and financial difficulty, such as the 1970s, when the dollar was weak, inflation was high, and confidence in government was low.