Gold Stock Analyst''s Doody says government intervenes secretly to cap gold


By Gary Parkinson
London Telegraph
July 4, 2002

Tony Dye, the fund manager dubbed "Doctor
Doom" for his pessimistic outlook on stock
markets during the technology boom, warned
yesterday of a "lurking time bomb" of
creative accounting in the derivatives

The value of contracts in the over-the-
counter derivatives market has hit $110
trillion (L72 trillion), he said, with the
market now worth three times the global

Speaking at a hedge fund conference in
London, Dye said: "The question is why people
are using them so much. The real reason must
be because some people are using these for
creative accounting purposes.

"My guess is that there'll be some real
nasties in the derivatives market in the next
12 to 18 months."

At the same time, Dye, the outspoken former
chief investment officer of Swiss-owned fund
manager Phillips & Drew (P&D), estimated fair
value in equity markets at 60 percent of
current levels.

He said he had a negative view of stock
markets and the American economy, and
strongly disagreed with fund managers who are
recommending clients buy equities at current

"The question is when we reach this fair
value," Dye said. "If it is in the next six
months, it is going to be very awful. If it
takes longer, medium-term return on equities
are going to be very low over the next five
to 10 years."

Under Dye P&D spurned investments in
technology companies and stuck to safer old
economy stocks. Its comparative performance
suffered and Dye, once regarded as one of the
City's foremost investment gurus, was hounded
out of a job. In February 2000 he stepped
down after 15 years as head of investment at

However, within two weeks of his departure,
the Nasdaq technology index peaked and many
of his predictions began to be proved

Now an independent hedge fund manager, Dye
reckoned that the end of 10 years of a bull
market in the 1990s was exposing "the
aggressiveness of chief executives and
accountants in creating fictitious numbers."

He warned: "We're getting into that period
when we'll see all the fraudulent practices
come to the surface. I'd like to remind
people that in 1991-1992, people didn't
realise that Japanese banks were almost