Doomsday Hedge Fund Manager Projects $3,000 Gold
Over the last few weeks, a number of mainstream banks and financial institutions have issued bullish outlooks for gold, forecasting record prices. Citibank projects $2,000 gold by early next year. Goldman Sachs now sees record gold prices within the next 12 months. And Bank of America released a note saying gold could break its US dollar record by the end of the year. Meanwhile, SGMC Capital Founder & CEO Massimiliano Bondurri told Bloomberg he thinks gold may hit close to $2,000 by the end of this year and could rally further due to dollar weakness.
Now, a hedge fund manager who has returned 47% so far this year says he sees gold rising to $3,000 and possibly as high as $5,000 in the next three to five years because of inflation central banks are powerless to control.
Diego Parrilla heads the $450 million Quadriga Igneo fund, often referred to as a doomsday hedge fund. As Bloomberg describes it, the fund “is predisposed toward hedging the next big crash while generating capital over time.” Parrilla describes his strategy as a search for “anti-bubbles.”
Peter Schiff has called the Federal Reserve’s response to the coronavirus pandemic as a “monetary Hail Mary.”
The Fed is desperate. They know that everything is going to fall apart. So, they just got interest rates at zero and they don’t care what happens. It’s like they got their pedal to the metal, and they’re going full-speed ahead, and they just closed their eyes. They don’t even care what’s on the road because it doesn’t matter. Even if they go over a cliff and crash and burn, it doesn’t matter because they’re going to die anyway. I mean, that’s basically what they’re saying.”
Parrilla describes the central bank policy in similar terms.
What you’re going to see in the next decade is this desperate effort, which is already very obvious, where banks and government just print money and borrow, and bail everyone out, whatever it takes, just to prevent the entire system from collapsing.”
When the government and the Fed ramped up their extraordinary monetary policy in response to economic shutdowns spurred by COVID-19, Peter said hyperinflation went from the worst-case scenario to the most likely scenario. But despite the trillions of dollars printed out of thin air and injected into the economy, the mainstream remains relatively unconcerned about inflation.
Parilla shares Peter’s view. He said the central bank monetary policy and stimulus packages have exacerbated deeper issues already present in the financial system. It didn’t just start with the pandemic. Central banks kept interest rates near zero for more than a decade after the 2008 crash and seem perfectly willing to re-write the policy playbook during a crisis.
What we’ve seen over the last decade is the transformation from risk-free interest to interest-free risk, and what this has created is a global series of parallel synchronous bubbles. One of the key bubbles is fiat currency, and one clear anti-bubble in this system is gold.”
Parilla said there is no reason to believe that the central banks will back off the money printing and bond-buying.
The bubbles are too big to fail and mommy and daddy will do whatever it takes to prevent this.”