Gold is King of New Orleans Conference

The annual New Orleans Investment Conference is usually rated as the premier investment conference. Over its 35-year history, it has hosted some of the world’s most noted economists, politicians, financial gurus and others. The average net worth of attendees is almost certainly the highest of all multi-day investment programs in North America.

In the first week of October several hundred attendees feasted on a wide variety of presentations over four days. Speakers came from a myriad of backgrounds, including Rick Santelli, Charles Krauthammer, Karl Rove, Howard Dean, Doug Casey and Ron Paul. There were also dozens of exhibitors from a variety of industries, of which mining companies were the most common.

Although the financial experts making presentations came from a wide variety of backgrounds and specialties, it was surprising that some of their recommendations for action were almost unanimous. For instance, just about all of them, when discussing equity investments, considered the domestic and foreign markets to have few bargains at today’s prices. While specific bargains can be located here and there, as can always be found no matter the general trend of the equity markets, they are few and far between. Generally, the speakers warned against the possibility of a pullback in the near term, possibly even affecting gold and silver mining companies.

When explaining where they would invest their money today, nearly every speaker emphatically recommended gold.

In some instances, gold was the only investment they liked without reservation. Since the backgrounds of the speakers include real estate, equities, bonds and even somewhat exotic fields (tequila) in addition to resource extraction and precious metals trading, I was astounded to find such a consistency of opinion. When one panel of four speakers (Gene Arensberg, Pamela Aden, Chris Powell, and Rich Checkan) was asked to forecast the price of gold one year from now, they all said at least $1,500 and possibly as high as $2,000.

Of speakers who recommended gold mining shares, there were no companies that were on most speakers’ lists. There was some overlap of recommendations, but each speaker had some favorites that no one else mentioned. There was a significant air of caution with these recommendations. Money manager Adrian Day, for instance, noted that only about one of every 3,000 “finds” that are explored for gold ever become an operating mine.

A handful of speakers included silver in their discussion of precious metals. Those that did so almost all predicted silver will outperform gold over the next few years (one speaker predicted their performance would be about equal) and deserved part of the allocation in everyone’s portfolio. Some speakers considered uranium to be a value at today’s prices, though, as one speaker said explicitly, they were not necessarily able to recommend any particular uranium mining company stock.

With so much enthusiasm for gold and silver, I was surprised to realize that I do not recall any speaker recommending platinum or palladium bullion or mining companies.

Energy companies, especially for natural gas, also had several endorsements, though the particulars varied with the speaker.

One speaker, Robert Meier, made a strong recommendation for purchasing precious metals through futures markets as being the lowest cost approach. While the information he presented was generally accurate, including his comparisons to purchasing physical precious metals through coin dealers and precious metals brokers, he left out or glossed over discussion of some of the risks of futures trading. This subject of which is the better way to own precious metals is of enough importance that I plan to discuss the subject in another NumisMaster column or in the next issue of Liberty’s Outlook, the monthly newsletter that I write.

Most, though not all, of the speakers predicted that global financial problems will get worse before they get better. A significant minority anticipated that the U.S. dollar will eventually fail. Perhaps the most persuasive of these doom-and-gloom speakers was John Williams (www.shadowstats.com), who has made a career of scrutinizing government economic statistics, then trying to correct them to more accurately portray the information that the statistics supposedly reflect. During his remarks, he said he expects the U.S. dollar to fall sharply in value, though it may not go all the way to total collapse. He does expect to see a barter economy in the United States in which precious metals serve as a medium of exchange. Following the financial crisis, he expects a tremendous social upheaval across the nation. Williams’ forecast of a deteriorating U.S. economy was not unique. In fact, most speakers agreed with him.

One significant inference that can be drawn from this year’s conference is the relatively small audience. Some of the decline can be attributed to some investors cutting back on their expenses. However, this conference has always been famous for its coverage of the gold market. Perhaps some of the drop in attendance can be attributed to the widespread negative coverage of gold by the mainstream media over the past few years. There is at least one widely quoted analyst (that I won’t further embarrass by mentioning his name) who has been predicting an imminent crash in the spot price of gold ever since it was about $450 a few years ago. If investors are being fed a steady stream of negative news about gold, it may not make sense to attend an investment conference that includes major coverage on the gold market. This lack of interest in attending this conference could be an indicator of how much potential exists for an increase in future gold demand.

The major presentations and panels were all recorded and are available on CD or DVD. For more information on this year’s event or to obtain copies of the recordings, go to www.neworleansconference.com.

Attendance at any of the major investment conferences in the U.S. or Canada can be highly educational. Almost always, there will be opportunities to get answers to questions that are most important to you. Other shows charge much lower admission fees than the New Orleans conference (the Silver Summit in Spokane, Wash., that I attended three weeks earlier cost $25, for example), yet they can give you important information you need to help with your investment decisions. As long as you use your common sense and critically analyze what you hear and see, the information you bring home from these investment conferences can be well worth the time and cost.

Patrick A. Heller owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” the company’s monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. His periodic radio interviews on WILS-1320 AM can be heard at http://www.amlansing.com, on the Korelin Economic Report at http://www.kereport.com, and on Coin Chat Radio at www.coinchatradio.com.