Eaton Vance's Rees-Moog Sees Tremendous Values in Emerging Markets

Now, they are investing in Australian gold mines, Russian gold mines -- they're clearly focused on gold. And they're managing their money more tightly to maximize profits.

Also, the gold price has been greatly undervalued. In a period of market uncertainty, gold is a great place to put your money.

Look at the major global currencies. If you look at the euro, the underlying economies are in a bad way. The stability pact has been called "stupid" by [European Commission President Romano] Prodi -- not a very productive comment, but it happens to be true. The euro is not where you want to put your money. The yen is backing the Japanese economy, which is in long-term doldrums. The dollar requires $2 billion a day to keep the U.S. trade deficit funded.

If you look at the world's three major currencies, there's good reasons to believe all of them were going down. They can only go down against each other. I think this remains very positive for gold. (Laughs.)

If it were just that alone I wouldn't invest in gold stocks, because I could be wrong about the gold price. It's hugely helped by the fact that the companies are improving their management techniques and are very aggressive in increasing productivity and profits. Add to that a gold price that is very stable, plus a positive macro view, and they remain good investments.

4. You have a number of holdings in China. Would you provide your perspective on the country?

We have quite a big exposure to China. It is an enormous area of growth -- 10% annual growth rates for more than a decade. The numbers are so staggering that when you talk about the Shenzen and Shanghai areas, you're talking about a population the size of the United Kingdom. And the country has a billion more people in the poor hinterland.

So, you're getting pockets of China that are really almost "first world" already, but we've got a huge pool of low-cost labor so they can carry on growing through there. You hear stories of factories moving lock, stock and barrel 50 miles inland and halving their costs. That brings more people in to the manufacturing systems and prosperity and wealth. It's a great virtuous circle.

But the caveat: Every body knows that story. Every fund manager is fully aware of that. Therefore, you periodically see great spikes in the value of Chinese stocks. Sometimes these stocks get hopelessly overvalued. So we have to be careful to take profits when everybody gets overexcited, and that we look beyond the China Mobiles(CHL Quote) of the world, which everybody is fully aware of to find stocks that haven't been discovered so much.