May 25, 2011 / 10:58 PM / 6 years ago

Worried about the future? Try buying gems

<p>An employee poses with a 24.78 carat Fancy Intense Pink diamond at Sotheby's in Geneva November 10, 2010. REUTERS/Valentin Flauraud</p>

NEW YORK (Reuters) - The rising debt burden is prompting some top investors to come up with some pretty creative -- and far out -- hedging strategies.

At the Ira Sohn Investment Conference in New York, top money managers like Jeffrey Gundlach of DoubleLine Capital and Erez Kalir of Sabretooth Capital ventured far afield from the typical stock and bond ideas offered in prior years.

Even a big position in gold, an ancient safe haven of value in tough times, seemed inadequate to Gundlach, who said he feared a total breakdown of the financial system.

“For real wealth preservation, portability has got to be an issue,” he said at the conference. He recommended buying gemstones, pointing out that an investor could carry $25 million worth in their socks.

That annoyed Marc Faber, a longtime bearish investor and author of the newsletter the Gloom, Boom & Doom report. He argued that primitive civilizations remaining after a future economic collapse would still value gold, not gemstones. If you’re in a jungle or a desert, people still value gold, he said.

Mark Hart, chief investment officer of Corriente Advisors, set up a fund to bet against China, which he said has stoked its economic growth with “a credit fueled bubble.” The coming bust in China will be “orders of magnitude” greater than the crash that followed the Asian debt crisis of the late 1990s, he said.

Sabretooth’s Kalir could not find any typical asset class to use as a hedge, rejecting popular strategies like buying gold or shorting Treasury bonds. He’s recommending farmland, preferably outside the United States.

Editing by Steve Orlofsky

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