Thursday, October 18, 2007

Bob Brinker's Gold "Recommendations"

This past weekend on Moneytalk, I heard Bob Brinker take
credit for making a recommendation to buy gold as hedge.
To the best of my knowledge he has never made a
recommendation to buy gold. He got away with this
on-the-air deception because there was a small element
of truth to what he said--so he could easily spin it to
make himself look good and get away with it.
Bob Brinker has consistently refused to recommend gold
per se. Rather, when callers have asked him about buying
gold, he would sometimes explain how much it was selling
for in the late 1970’s as opposed to what it is selling
for now. He would never mention how much the price of
gold has increased over the past few years.
And he would say that he did not own gold and had never
recommended buying it, but if someone was determined to
own a small amount as a “hedge,” he would suggest buying
the gold ETF: GLD.
Here are David Korn’s comments about the “gold” calls
this past weekend.
These are excerpts from David Korn’s
newsletter—posted with his permission.
David Korn wrote all of the following:

Caller: This caller owns some gold and wanted Bob's
opinion on whether to continue holding it or sell.
Bob said he wouldn't be doing numismatics unless he
was a coin dealer due to the mark up that you must
pay to transact. As far as whether to stay with gold,
Bob said if investors want to own it as a hedge, that
is fine. In fact, Bob said he just checked the numbers
and Bob said since he has been recommending gold as a
hedge for those who want it as a hedge, it is up about
40% and so it has done very well. Bob said if you want
to own it as a hedge against inflation or whatever,
you can do that, but Bob said he doesn't own it and
doesn't see inflation. Bob said he has not missed out
being in gold because he has been invested in the
stock market and it is up over 100% in the last few years.
EC: This is a new one for Bob -- taking
credit for making a recommendation
something he doesn't own and wouldn't
own and said specifically he
would not
make a recommendation to own.Bob has
been steadfastly BEARISH
on gold for
as long as I have been doing my newsletter.

Caller: If you own gold outright and want to convert
it to dollars, this caller said he heard the premiums
could be as high as 4%. Bob said that is absolutely
true. The transaction costs associated with selling
gold and gold coins can be astronomical.
Brinker Comment: Bob said the American Eagle gold
coin sells at a 5% premium to their gold content
as does the Canadian Maple Leaf. That is a hefty
premium. However, if you want to buy gold coins
with the smallest premium, that would be the
Krugerrand, the Australian Crown and the Mexican
Peso. Bob said gold has a portable value for
some people in third world countries, or in
countries where people are trying to escape
from their country. They can be sewn into their
clothing and taken with them.
EC: Gold for December delivery closed at $753.80 an
ounce on the New York Mercantile Exchange Friday.
I am still looking for an entry point for a position
in gold. I feel like a broken record saying that, and
should have just jumped in at some point over the past
year or so, but was (and am) hoping for a significant
correction. Might not get one. The investment
vehicle I will use (if gold ever gets to a price I
feel comfortable purchasing it at), is the streetTRACKS
Gold Shares ETF (ticker: GLD)."

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Anonymous said...

Brinker has called gold "dead money" for years. He has stated a number of times anyone that has invested in gold the last 20 years is underwater.

Much like the S&P 500 - when you adjust for inflation.

Honeybee said... are correct. As I said in my post, he has mostly harked back over 20 years so that he could claim he has always been "right" not to recommend gold.

However, this weekend was the first time that both David Korn and I heard Brinker claim to have made a gold recommendation. Naturally, he claimed to have done that when gold was much lower than it is now.

That is certainly playing fast and loose with the truth and having it both ways since he has always been very clear that he did not recommend buying gold. Rather, he would say that IF a caller was determined to buy some gold as a small hedge, he would suggest using the gold ETF.

Now he is claiming that what he said was a "recommendation" to buy gold. I think he is being disengenuous, deceptive and a dishonest.