Gold and Silver Snips

Top investors in precious metals are waiting for a pullback to buy, but they say gold looks like a promising inflation hedge well into the future. China is hungry for it, too.

In a recent trip to New York, I had the opportunity to meet with my (very successful) metal trader friends and some other smart investors, as well as listen to a star-studded cast of brilliant thinkers/investors who shared their world views at the Grant's Interest Rate Observer fall conference.

My metal trader friends all want to see a big flush in gold -- a fairly quick 5% to 8% price drop -- before piling in. But they say if the drop doesn't happen in the next week or so, it probably won't.

I don't want to go into too much detail about what the speakers said at the conference. That would be unfair to those who paid good money to hear their views, and to Jim Grant. But I would like to share a couple of thoughts I came away with and a couple of points made by hedge fund luminary John Paulson, famed for making billions by anticipating the subprime mortgage meltdown.

In the for-what-it's-worth department, when I attended the Grant's conference in the fall of 2007, I noted that there was no outright bearishness and that it seemed folks were pretty sanguine. This was six months after the first payment defaults had begun, which was the start of the vaporization of the subprime industry.

I wrote at the time that I had expected to see much more bearishness at the conference. I didn't know what that meant investment-wise, but I thought it was worth noting.

However, at last week's conference in New York, bearishness was quite profound. That does not mean the participants don't have the right view this time around. And there are certainly many, many good reasons to be bearish. I myself have certainly spilled enough ink listing them.

But other than Grant's view that the size of the collapse means we're about to see a decent-sized bounce in the economy (however sustainable) -- eloquently expressed in his Wall Street Journal article "From bear to bull" -- and, from Paulson, some expression of confidence in investors' animal spirits, there was virtually no optimism.