Billionaires Bet Big on Gold in 2016 – Motley Fool

Release Date: 
Thursday, December 31, 2015

Gold and Silver Prices
In the last trading week of the year, gold prices fell despite a modest increase on Friday. A stronger dollar and the Federal Reserve’s recent interest rate hike continued to weigh on the yellow metal.

“The price of gold traded higher on the last day of a year in which the precious metal fell to its third consecutive annual loss, declining on the back of the new U.S. interest rate cycle that is likely keep the pressure up in 2016… A key factor behind that fall was anticipation that the U.S. would see its first rate rise in nine years. Gold offers no income, making it less competitive with yield bearing securities like Treasuries. This anticipation also helped push up the dollar, which has gained nearly 25% in the past 18 months making greenback denominated currencies more expensive for many investors.” (“Gold Falls to Third Straight Annual Loss,” WSJ, 12/31/15.)

Gold ended the week down $14.60, closing at $1,062.00. Silver prices closed at $13.93, down $0.49.

Billionaires Bet Big on Gold in 2016 – Motley Fool
The financial website, Motley Fool, reported that several savvy billionaires are investing in gold, believing the price will rise in 2016.

“Here are some of the billionaires bucking the trend with contrarian bets that gold will be going up again… One big name that's been shifting into gold is Stanley Druckenmiller. Don't feel bad if you don't know that name -- he stepped out of the money business in 2010. Now he just manages money for himself. But he's got so much money that he still has to report large stakes to the SEC…

“So, why should you care about some rich guy who doesn't manage money for anyone but himself? His pedigree. Druckenmiller was the chief strategist for George Soros, a name you've probably heard of. If Soros trusted Druckenmiller with his billions, he's probably someone worth listening to… Druckenmiller is putting a fairly large chunk of his $4 billion or so fortune into his gold bet through his personal investment vehicle…

“Another big name that's still got a stake in the barbarous metal is John Paulson and his hedge fund group Paulson & Co… The thing about Paulson is that one of his best trades came out of the precious metals space. Indeed, he moved aggressively into gold in 2009 and 2010, just as the metal was heating up. He reportedly made as much as $5 billion on that single trade. But that's not the only big-picture call he's made that's worked out -- he also bet against housing in 2007, earning a reported $4 billion profit… Moreover, he has noted that gold has a place in portfolios as insurance against the unexpected. With the Fed starting to raise interest rates, the risk of unintended consequences looks like it just started to heat up…

“That sentiment is backed up by Ray Dalio, founder of Bridgewater Associates. He's been quoted as saying, ‘If you don't own gold, you know neither history nor economics.’ Basically, gold is the insurance play, which is what Paulson has been saying. Dalio, for his part, appears to be worried about what's going on in the world's markets today, recently telling Bloomberg that he believes the global economy is in what could best be described as a fragile position…

“Druckenmiller's gold bet is pretty large, making a statement that he's seeing something the rest of the market doesn't… But even if you don't think a bet as large as Druckenmiller's makes sense, having a gold ‘insurance policy’ might still be a good idea as the Fed shifts the United States toward a new economic reality -- one that will have major ramifications for global markets….”  (“These Billionaires Are Betting Big on Gold in 2016,” The Motley Fool, 12/29/15.)

Technical Analyst “Highly Suggests” Investors Move Into Gold Market
Market analyst and author Avi Gilburt, who successfully called gold’s top in 2011, urges investors to return to the gold market in 2016.

“As we move into 2016, I believe there is a greater than 80% probability that we finally see a long term bottom formed in the metals and miners and the long term bull market resumes.  Those that followed our advice in 2011, and moved out of this market for the correction we expected, have done quite well, and are now moving back into this market as we approach the long term bottom.  In 2011, before gold even topped, we set our ideal target for this correction in the $700-$1,000 region in gold. We are now reaching our ideal target region, and the pattern we have developed over the last 4 years is just about complete.

“For those interested in my advice, I would highly suggest you start moving back into this market with your long term money in 2016.” (“The Gold Phoenix Will Rise In 2016…But Were The Ashes ‘Manipulated?’” Gold Eagle, 12/30/15.)


Investment Expert Rickards: I’d Invest 10% Of My Portfolio In Gold/Precious Metals in 2016
As part of its series on investing like the experts, Jim Rickards was asked how he would invest $100,000 in 2016.

“Expert: Jim Rickards

“Claim To Fame: Currency guru, best-selling author of Currency Wars and The Death of Money

“How would you invest $100,000 in 2016?

“10% in gold and precious metals…

“What factor will affect gold the most in 2016?

Geopolitics 5%; Monetary Policy 30%; Dollar 30%; U.S. Politics 5%; Inflation/Deflation 30%.  Rickards noted that he considers monetary policy, dollar, and inflation/deflation to be the same thing with 90% explanatory power, so he gave each one an equal 30% weight....” (“Rickards: Fed, USD, Inflation To Have Biggest Impact On Gold In '16 - Invest Like The Experts Series,” Kitco, 12/31/15.)

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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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