Diversifying with Gold New Strategy for Janus Capital’s Bill Gross

Lately, there’s so much gold stockpiled by governments and investors, someone should pitch a new reality TV show called Gold Hoarders. But rather than poor agoraphobics maddeningly piling up old newspapers and canned food, the show would feature smart individuals like Bill Gross who have the foresight to see the writing on the wall. The message is simple, “Look out for a collapsed dollar and low-yielding assets.”

Bill Gross is all straight talk when it comes to his preference for precious metals investment. “I don’t like bonds; I don’t like most stocks; I don’t like private equity,” the Janus Capital portfolio manager told investors this week.

What’s his reasoning? It’s pretty straightforward. Central banking policy has eliminated a healthy, open market atmosphere where high-yield opportunities are no longer readily available.

The Fed’s low-interest policy is intended to stimulate growth through easy money, but Gross sees this as backfiring. Leaders face “too much risk for too little return,” he states. There’s simply not enough incentive for lenders to lend. It’s a situation the Bank of England is attempting to guard against after last week’s historical rate drop. Gross wrote:

Central banks seem oblivious to this dark side of low interest rates. If maintained for too long, the real economy itself is affected as expected income fails to materialize and investment spending stagnates.”

In such a low-yield market, buying gold and silver becomes an easy way to bring stability to your portfolio. Gross is just one of many respected investors who are heeding Peter Schiff’s call to diversify your portfolio by investing in 5-10% of it in gold and other physical precious metals.

George Soros and Toronto-Dominion Bank’s chief investment officer, Bruce Cooper, have recently come out with bearish moves for gold. Analysts have attributed gold hoarding by companies and governments to economic and geopolitical events like price increases, negative interest rates, Brexit, and the upcoming US election.

Peter Schiff’s description in The Little Book of Bull Moves accurately explains the current situation:

With the dollar facing imminent collapse and the foreign central banks printing their own currencies to buy dollars in politically motivated yet economically misguided attempts to manage its decline, people are responding by buying gold.”

The Bank of England’s decision this week to cut rates to .25% is likely to heavily figure in the Fed’s decision for the remainder of the year. As Peter’s predicted many times already, not only will the Fed not raise rates, but it’s much more likely to cut them again.

With a zero to negative rates forecast, gold’s price will continue its march upwards. Not a bad time to consider buying gold and silver.

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