Wednesday, March 6, 2013

Another Dumb Hit Job From Business Insider on Ron Paul

Although Rand Paul has perhaps delivered the dumbest foreign policy speech in history and Paul Krugman has a bizarre view that a babysitting co-op coupon system is a model of the economy, Business Insider continues to promote both these characters. In fact, the mutual admiration society that has developed between Krugman and BI's Joe Weisenthal is so over the top that I am beginning to think that Weisenthal may be Krugman's secret love child.

That said, on the other side of the spectrum, the hate for Ron Paul at BI continues. The latest hit job on Dr. Paul comes in the form of an attack on his stock portfolio. BI's Walter Hickey writes:
Earlier today we revisited former Texas Congressman Ron Paul's precious metal-heavy portfolio. 
Paul is one of the most famous advocates of gold as an investment, so we took a look at how his 64 percent precious metal portfolio was handling the recent crash in the price of gold.
We took a look at the three major mining stocks that the Wall Street Journal described as the largest of Paul's holdings. Here's what has happened to them in the past six months:
  • Newmont Mining Company: –24.17%
  • Goldcorp Holdings: –24.21%
  • Barrick Gold: –27.14%
While those were reported as his largest holdings, Paul did report owning shares of a swathe of "junior" mining companies, considered smaller and riskier bets.

We took a look at how those mining companies performed in the past six months. The result is a series of brutal losses: 
  • Agnico Eagle Mines :  –20.6%
  • Allied Nevada Gold Corp: –49.03%
  • Alumina Common: +51.28 %
  • Anglo Gold Ashanti Ltd. –29.55%
  • BrigusGold Corp. Com MPV: –23.39%
  • Claude Research Inc: –46.67%
  • Coeur D'Alene Mines Corp: –24.92%
  • Hecla Mining Co: –26.94
  • El Dorado Gold Corp: Not Listed
  • IAM Gold Corp: –54.54%
  • Kinross: – 17.42%
  • Lexam Explorations Inc: – 29.41%
  • Mag Silver Corp: –17.39%
  • Metalline Mining Co: Not Listed
  • Pan American Silver: –17.55%
  • Silver Wheaton Corp: –15.57%
  • Virginia Mines Inc: +5.15%
  • Vista Gold Corp. –48.32%
  • Viterra Inc +0.62%
  • Wesdome Gold Mines Ltd: –38.21%
Looking at the twenty-one publicly listed mining companies in the Ron Paul portfolio,  the average return on investment was a dismal –22.62% over the past six months.
This is about the dumbest "analysis" that could be put out. Dr. Paul did not just buy his gold stocks six months ago. He has been buying for decades. Since the latest gold boom started in 2000, gold has soared with occasional pullbacks:

If you cherry picked any of those pullbacks, gold for a short period might have looked like a poor performer. However, if you maintained the positions over time, as Ron Paul did, you would have looked like a  financial genius. Indeed, I suspect that Dr. Paul during his period in Congress probably had the best performing stock portfolio of any member of Congress (and many of the others trade on inside information!)

If BI was serious about its report, instead, of just looking at the last six months, it would have been legitimate to ask "Is the amazing performance of Ron Paul's portfolio over?" That would have been the correct perspective in which to analyze the portfolio. From there, it would have been easy to recognize that the recent dip in gold is not unexpected and likely short term in nature. As I wrote at the start of the year in the EPJ Daily Alert, before the recent decline in gold:
Gold will be tricky in here. There may be a slight downward trend as those who moved into gold for safety leave gold in the flight AWAY from safety. However, longer term, price inflation will result in a new upward turn in gold. Thus, accumulate gold on any weakness.
Bottom line: Ron Paul will be back looking like a financial genius by the end of the year, even for those who only look at only short term performance.   Will Business Insider cover it? Not likely.

(ht Travis Holte)


  1. Also,just once, could they do the same in-depth analysis of any other members portfolio? Take a look at Nancy Pelosi's portfolio and see how she's done. Even better if they'd line it up with votes she brought to the floor. A man can dream...

  2. The DOW has been over 14k for a while now, and I've read several analysts claim that "a new, permanent high" is here.

    Famous last words. The market is headed for a massive crash, and gold will go through the roof.

    Ron Paul will again look like a financial genius.

    1. Hey if any of those statements are online, could you link us to them?