Billionaire Paul Singer Says Gold Under-Owned, As Precious Metals Rally

The price of gold is rallying on growing uncertainly about a Federal Reserve interest rate hike and fears companies may disappoint already low expectations with third quarter earnings reports. No wonder billionaire Paul Singer said every investor should buy gold.

According to a Bloomberg report, Singer criticized monetary policy makers for a “staggered economic recovery” and slammed “the cult of central banking” in which investors turn to regulators such as Janet Yellen and Mario Draghi to solve the ills of the global financial system.

Singer, a member of Bloomberg Markets 50 Most Influential, said he was surprised how few investors he meets own gold:

In a world where the value of paper money is affirmatively aimed at being degraded by central bank policy, it’s kind of surprising to me that gold can’t catch a bid. I like gold. I believe it’s under-owned. It should be a part of every investment portfolio, maybe five to ten percent.”

Singers comments come as economic dynamics suggest the price of gold and silver may have hit bottom and will continue on an upward trend.

As reported by Reuters, gold hit a three-month high this week. Silver also advanced three straight days amid signs of tightening supply and increasing demand.

Capital Economics analyst Simona Gambarini said growing doubt the Fed will raise interest rates is fueling the precious metal surge:

The majority of the rebound can be explained by the Fed … delaying rates, and more investors believing that there won’t be a rate hike this year.”

Federal Reserve Chair Janet Yellen said the central bank is still on track to up rates before the end of the year. But comments by Fed Governor Daniel Tarullo reveals sharp division within the bank’s leadership. Bloomberg reports Tarullo told CNBC the central bank should hold off on raising rates, lining him up with fellow Governor Lael Brainard, who also made the case for patience:

The dovish remarks from two of the five members of the Fed Board in Washington are an unusually sharp contradiction of the Fed’s leadership and set the stage for a robust debate at the central bank’s two remaining policy-setting meetings this year.”

As reported by MarketWatch, head of research at BullionVault Adrian Ash said the Fed faces a credibility problem:

Gold tends to gain when central bankers lose credibility, and Fed members are now pretty much arguing in public over ‘lift off’ before year’s end.”

Peter Schiff has been saying all year the Federal Reserve will not raise rates. Allowing interest rates to realign with historical levels would likely crash the “wonderland economy.” For all the talk about the Fed beginning the process of raising rates, this is highly unlikely. In fact, as Peter has argued, we will more likely get another round of quantitative easing.

Fawad Razaqzada, analyst at Forex.com, told MarketWatch pessimism surrounding third quarter earnings reports are also pushing gold and silver up:

Gold is continuing to benefit from the weakness in US dollar and safe-haven buying due to growing uncertainty about the direction of the stock markets. The US earnings season is about to kick into a higher gear this week with lots of banks reporting their quarterly results. The fear is that companies may disappoint the already-low expectations, while concerns over the health of Chinese economy may also undermine risk appetite.”

Earnings disappointments would not be at all surprising in the current economic climate. As we reported earlier this week, sales are trending downward and inventories are rising. A dismal jobs report earlier this month also points to a weakening economy. All of this makes a Federal Reserve rate hike even less likely, despite what Yellen keeps saying.

All of the signs indicate now is the time to buy gold. In fact, Singer called gold “the only real money:”

Gold would do well if people felt they needed some real asset to protect against inflation, government policy and/or diversification from stocks and bonds.”

You can read more about future of the US economy and the gold market in Peter’s special report, Why Buy Gold Now? Download the free report HERE.

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