Each day brings fresh evidence that the global markets are in meltdown mode. As this issue goes to press, we still don't know whether repeated government interventions will stem the panic selling for more than a day.

So it's a pleasant surprise to find pockets of calm among the investor class. A visit with the managers of the $21 billion First Eagle Global fund is just such a tonic. The managers, led by legendary deep-value investor Jean-Marie Eveillard, aren't projecting a quick fix to the problems in the U.S. and around the world. In fact, they've predicted gloom and doom for quite a while. But they aren't espousing stuffing the mattress with greenbacks either—at least not entirely. In fact, they're finding bargains in the rubble.

It may be easy to keep things in perspective if you've taken a jaundiced view of the American economy for years, as has Eveillard, who came out of retirement last year after the abrupt departure of his successor at First Eagle, Charles de Vaulx. Or maybe it's due to the $1 billion or so in gold bullion First Eagle has tucked away safely in a vault in New York's Times Square, a sort of insurance policy against complete financial ruin. First Eagle has always held gold in its portfolio.

"We have a preference for bullion," says Matthew McLennan, one of three co-managers of the fund, and Eveillard's named successor when he retires again in March 2009. "Treasury notes are a single-currency form of security, but gold is an international store of value." Best of all, he adds: "Gold often behaves very differently from Treasuries when you need it most."

It's certainly coming in handy now. Employing such highly unusual moves has earned First Eagle Global a stellar reputation over the years, even when its deep-value tendency made it seem out of step with other mutual funds. In the past five years ended Oct. 10, the fund is up an annualized 7.9%, beating 87% of world allocation funds, according to Morningstar. It's up 13.9% over the past 10 years, besting 97% of its competitors.

On the Crash

To Eveillard, McLennan and co-manager Abhay Deshpande, the global credit boom was years if not decades in the making. They blame former Federal Reserve chairman Alan Greenspan, whose easy credit policies made dubious mortgages possible and who allowed investment banks to create exotic instruments out of them. As the bubble expanded, Eveillard became concerned that American stocks would eventually falter, especially financials.

"I remember when banks would take deposits from you in the morning, find a small business early in the afternoon to lend to, make the spread and then go to the golf course with prospective clients," Eveillard says.

Over the past decade, banks were becoming more involved in complicated derivatives in order to boost earnings. In fact, Eveillard says, they were largely hedge funds disguised as banks. "It was very difficult to see what was there. You didn't know what the book value was and if the earnings were real, so we lost interest." Even now, with financial stocks decimated, Eveillard doesn't believe there is enough clarity in banks' financial statements to be able to invest wisely.

It may be tempting to draw lessons from Japan, a country where First Eagle Global has long held investments. In the early 1990s, Japan went through a similar deleveraging process as the asset bubble of the 1980s deflated. A decade of stagnation followed.

But the Japanese experience isn't likely to be repeated here, Eveillard says. Americans don't have patience for deflation and stagnation. "The risk of deflation in the U.S. is zilch," he says. "That's not the American public's preference."

Instead, inflation is more likely, Eveillard says. He expects Fed chairman Ben Bernanke to do all he can to provide the economy with liquidity, even if it means years of inflation. In that case, the fund's gold will hold its value and prevent excessive losses in the fund.

What They're Buying

That's not to say the team is interested only in gold. The trio is also finding stocks, even in the financial sector. Among this group, First Eagle likes Warren Buffett's Berkshire Hathaway. "It's going to be a beneficiary of the current environment because of its excess capital," McLennan says.

American Express is another financial that could escape the crisis unscathed. Its fee-based business generates plenty of cash, grabbing the attention of value investors. First Eagle Global's stake is under water from when the team bought shares in the second quarter. At the time, American Express traded between $40 and $45. On October 10, it closed at $24.37.