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A sold sign is posted outside a home in Springfield, Ill., that's been sold.

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Albert Friedberg is one of Canada's top hedge fund managers. He keeps a low profile, but every quarter, he hosts a conference call for clients where he outlines his investment ideas.

His current call: We're facing the prospect of a severe global recession. In reaction, he's buying gold , U.S. housing stocks, shares in Bank of Ireland and U.S. Treasury securities that offer protection against inflation. On the negative side, he says to sell gold stocks, and sell short the Indian, Brazilian, Australian and Spanish stock markets.

While Mr. Friedberg isn't a household name, he is a market player worth watching. His two flagship funds are each up by more than 20 per cent compounded annually over the past five years, based on an eclectic mix of investments on the long and short side of the commodity, bond, currency and stock markets.

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His eponymous firm, Friedberg Mercantile Group, recently posted his current market views on its website. The posting follows an uncharacteristically weak first-quarter performance for the money manager because bets placed that the European financial crisis would worsen didn't pay off in the quarter ended March 31.

With the recent turmoil in Europe, it looks as if those positions weren't necessarily wrong, just early.

Mr. Friedberg said that he was blindsided by the European Central Bank's decision to offer longer-term financing at concessionary interest rates to weak banks, a liquidity injection that lifted markets in the quarter. Mr. Friedberg said he had thought that the strong influence exerted by the German Bundesbank would have precluded such unconventional monetary policy and it came as "a shock" when the ECB acted.

Except for Germany, "Europe continues to sink into some kind of a depression, yet markets are not reflecting that," he said, and the central bank's actions have only "postponed the day of reckoning."

The investment case for gold is that central banks are printing too much money and keeping interest rates too low, which will benefit the metal over the longer run. Mr. Friedberg had previously invested heavily in gold stocks, but now views the actual metal as a better bet than shares of producers.

The reason for the switch is that institutional investors are preferring to trade bullion-linked ETFs, and consequently gold stocks no longer carry the premium multiples they used to have and are trading at similar valuations to other metal producers. In addition, gold companies carry extra risks due to management actions, depleting deposits and the need for financings.

"If you want to be in gold, you're better off, it's simpler to be in gold itself than be in mining shares," he says.

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Gold has been weak in recent months, but Mr. Friedberg says it is only a correction in a long-term uptrend for the yellow metal.

The bet on U.S. housing stocks is based on a view that it will only be a matter of time before the large overhang of homes from the bubble is absorbed, while low interest rates will be a spur to revive the market. He also thinks that in the period of economic turbulence he foresees, the U.S. stock market will do relatively better than the markets he is shorting.

The Bank of Ireland is a Buffett-like long-term value play, according to Mr. Friedberg. The bank was pummelled by the country's economic crisis but has since cleaned up its book of non-performing loans and has adequate capital.

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