28/05/2016

The Billionaires Are Wrong on Gold - by Nick Barisheff

Jeff Fitchett: This is an excellent article and I believe it is a must read for precious metals investors.  

Recently the mainstream media has reported that several billionaires are concerned about global financial markets and have purchased significant amounts of gold to protect their portfolios.

Take Stan Druckenmiller, the famed hedge fund manager who managed money for George Soros as the lead portfolio manager for Quantum Fund. He and Soros famously ‘broke the Bank of England’ when they shorted the British pound sterling in 1992, reputedly making more than $1 billion in profits. He has reportedly used over $323 million of his own money to invest in gold.  This is approximately a 30% allocation in his $1-billion family fund. His belief in gold can be attributed to his criticism of the Federal Reserve’s massive money printing and near-zero interest rates. Ongoing low rates will drive both central banks and investors into gold.

Then there’s John Paulson, the CEO of Paulson & Co., which manages over $18 billion in assets invested in credits default swaps. The company has made about $15 billion in profits by betting against subprime mortgages.  In 2015 Paulson invested about $900 million in gold at close to what now appears to have been the bottom of the three-year correction. He believes gold has a place in portfolios as insurance against the unexpected. “We view gold as a currency, not a commodity,” Paulson said recently. “Its importance as a currency will continue to increase as the major central banks around the world continue to print money.”

Typically the billionaires are ahead of the curve, making their investments before the market recognizes the trend, and increasing their wealth while everyone else wonders what happened….



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