Billionaire Investor Allocates Largest Currency Percentage to Gold

Release Date: 
Friday, May 6, 2016

Gold and Silver Prices
Gold prices rallied on Friday following a disappointing U.S. jobs report, another indicator of a weak economy which may compel the Federal Reserve to stay future interest rate hikes.

“Gold prices are solidly higher in early U.S. trading Friday, in the aftermath of a U.S. employment report that did not meet market expectations… The report falls into the camp of the U.S. monetary policy doves who do not want to see the Federal Reserve raise interest rates any time soon. Today’s jobs report probably nixes any FOMC rate hike at the June meeting….” (“Gold Rallies In Aftermath Of Downbeat U.S. Jobs Report, Kitco News, 5/6/16.)

Gold ended the week down $3.70, closing at $1,288.70. Silver prices closed at $17.54, down $0.28.

Billionaire Investor Allocates Largest Currency Percentage to Gold - Bloomberg
Bloomberg reported that one of the most successful money managers, Stan Druckenmiller, has chosen gold as his largest currency allocation.

“Stan Druckenmiller, the billionaire investor with one of the best long-term track records in money management, said … gold is his largest currency allocation.  Druckenmiller … who averaged annual returns of 30 percent from 1986 through 2010 at his Duquesne Capital Management [explained that as] bankers experiment with ‘the absurd notion of negative interest rates… he’s wagering on gold. ‘Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation,’ he said, without naming the metal.

“Gold futures climbed 20 percent this year in the best start since 2006, helped by speculation that the U.S. Federal Reserve will be slow to tighten monetary policy amid global risks to growth and as lending rates in the euro area and Japan fell below zero. On the Fed, Druckenmiller said the central bank has borrowed more ‘from future consumption than ever before… By most objective measures, we are deep into the longest period ever of excessively easy monetary policies,’ he said….” (“Druckenmiller Loads Up on Gold, Saying Bull Market Exhausted,” Bloomberg, 5/4/16.)

Gold to $1500 By End of Year - Gartman
Economist and financial analyst Dennis Gartman told CNBC that gold remains in a bull market with prices expected to reach $1500 per ounce by the end of 2016.

"Gold has enjoyed a spectacular beginning to 2016, and one widely followed commodities expert believes the metal could be on the verge of going much, much higher. ‘I think it's still a bull market,' said Dennis Gartman, editor of The Gartman Letter... He predicts gold could finish out the year 10 to 15 percent above current levels. With gold hitting a 15-month high Monday and breaching $1,300, that would represent a price as high as nearly $1,500.

“Even though he granted the precious metal tends to get to "big, round numbers" like $1,300 and ‘back off,’ Gartman said the fundamental case remains intact, due to central bank policies…

“Easy monetary policies tend to make a country's currency less valuable, potentially leading investors to turn to gold as a store of value. In addition, the low interest rates engendered by these policies make the yellow metal relatively more attractive, since it means investors aren't missing out on much by holding a nonyielding asset. 
For these reasons, Gartman is confident that the bear market in gold is officially over, even though it's still down about 33 percent from its 2011 peak… Gartman makes the case for owning gold in yen, euro and dollar terms in order to reap the biggest benefits from the rally….” (“Gartman says gold is in a true bull market—and on its way to $1,500,” CNBC, 5/3/16.)

Gold Is Real Money; Necessary to Preserve Wealth - Fulp
Certified Professional Geologist and Kitco commentator Mickey Fulp reviewed the gold-silver ratio since the U.S. left the gold standard, concluding that every investor must include gold in their portfolios.

“I have written a lot of words documenting the record of gold and silver prices and ratios over the nearly 45 years since the United States (and therefore, the world) abandoned the gold standard. But what are the longer-term ramifications of a monetary system without backing?

“From that juncture, we were left with nothing but a basket of fiat currencies posing as surrogates for real money. History has proven time and time again that all governments, whether city-states, countries, or empires, eventually debase their currencies to worthlessness and the world economic system lapses into chaos.
We nearly witnessed such a scenario in the late summer and fall of 2008 but somehow, the banksters saved the system until a future day. Their solution, however, spawned a current world economy saddled by unserviceable debt, serial insolvencies, negative interest rates, deflation, and debased currencies.

“Many of us realize the present world economic paradigm is unsustainable and collapse is inevitable. Some pundits pontificate that this economic Armageddon is imminent. But folks, I am here to tell you that no one can predict when it will happen. Those that try seem mere analogues to fundamental religious zealots who set serial dates for the end of the world. As you can gather, it is difficult for me to put much stock in their perma-gloom-and-doom dogma.

“That said, here’s what I know: gold is real money and owning it will preserve your wealth no matter what economic catastrophe is laid upon us. I’ve got my stash and trust that you do, too….” (“The 45-Year Record of Bullion Prices,” Kitco, 5/3/16.)

As World Moves to Cashless Society, Gold and Silver Become the Currency of Anonymity – Newsmax
Writing for Newsmax, behavioral economist Jared Dillian explained that as the world economies move towards a cashless society, ordinary people will be required to acquire gold and silver as the currency of anonymity.

“Startling developments happened in the past few months. Like, did you hear the talk about getting rid of $100 bills? It’s not just C-notes. 500EUR notes in Europe, 1,000CHF notes in Switzerland—everywhere people are talking about killing large-denomination bills because… some people use them to evade taxes or to commit crimes…

“This is scary. Part of economic freedom is anonymous transactions. Take the extreme example where cash is eliminated altogether. Everything goes on a credit or debit card. Your whole purchasing history is stored on the Internet…

“This talk about large-denomination bills is really gaining momentum, and I think that’s at least half responsible for the run up in gold prices over the last couple of months. Think about it—in a world without cash, gold (and silver) becomes the currency of anonymity. You can see how this will play out: they ban cash, people start using gold… How much will gold be worth then? This also speaks to the need to hold gold in physical form….” (“People Flock to Gold in Scramble for Anonymous Currency,” Newsmax, 5/6/16.)

Call 866-867-4466 and request Goldline’s Cashless Society brochure to learn more.

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†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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