GOLD PRICE OUTLOOK REMAINS BRIGHT, SAYS EINHORN

January 12, 2011

Gold Price Outlook Remains Bright, Says Einhorn

By GoldAlert

GoldAlert
January 12, 2011

…Coming off ten consecutive years of gains, the gold price continues to be supported by the Fed’s quantitative easing program, Europe sovereign debt crisis, and the widespread belief that central bankers across the developed world are willing to sacrifice their currencies in order to stimulate their economies. …

Einhorn, President of $8 billion hedge fund Greenlight Capital and a prominent gold bull, has been a vocal critic of the Federal Reserve’s zero interest rate policy. He contends that the economy can become conditioned to expect interest rates to remain low indefinitely, which causes borrowers to "become very over-extended and over-confident in how much debt they can handle. …

As for Greenlight Capital’s gold position, Einhorn said that it "reflects our view that the monetary policy doesn’t make sense…and you combine it with a very aggressive fiscal policy with deficits that are very large and not likely to contract in any important way with very additionally large longer-term implications."…

Einhorn went on to say that he sees gold "as sort of the inverse of what’s going on with the paper monies." He pointed to the ongoing currency debasement in not only the U.S. dollar, but also in the Yen, Euro, and British Pound, noting that policymakers "are in a sort of battle to see who can devalue the fastest." With no end in sight for competitive devaluations across the globe, Einhorn contended that the economic backdrop for the price of gold remains particularly attractive.

Read full article here.

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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