Gold’s Best Quarter in 30 Years Is Just the Beginning
Last week, we reported that billionaire investor Stanley Druckenmiller is publicly advising investors to sell United States stocks and buy gold. Druckenmiller is now joined in his gold recommendation by an equally legendary hedge fund manager – Paul Singer.
In a client letter at the end of April, Singer wrote:
It makes a great deal of sense to own gold. Other investors may be finally starting to agree. Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies… We believe the March quarter’s price action could represent something closer to the beginning of such a move than to the end.”
Gold has gone up 20% already in 2016, so it’s not surprising that the large money managers are starting to board the gold bull train. With billions of money under management, investors like Druckenmiller and Singer must watch the big-picture trends, rather than rely on the economic forecasts provided by the Federal Reserve. In fact, these guys are often directly critical of the Fed.
We shared Bill Gross’ latest investment thoughts yesterday, and we believe Singer and Druckenmiller would likely agree. Gross lays out the fundamental long-term case for gold:
I have long argued that this is a Ponzi scheme and it is, yet we are approaching a point of no return with negative interest rates and QE purchases of corporate bonds and stock. Still, I believe that for now central banks will print more helicopter money via QE (perhaps even the US in a year or so) and reluctantly accept their increasingly dependent role in fiscal policy… Investment implications: Prepare for renewed QE from the Fed. Interest rates will stay low for longer, asset prices will continue to be artificially high. At some point, monetary policy will create inflation and markets will be at risk.”
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