Top Hedge Fund Managers Favor Gold

Release Date: 
Friday, March 6, 2015

Gold and Silver Prices

Gold prices fell this week as a stronger than expected job report increased speculation that the Federal Reserve would raise interest rates this year. “Gold prices fell to a two-month low on Friday, after data showed the U.S. economy created more jobs than expected last month, bolstering the case for the Federal Reserve to raise interest rates around the middle of this year.” (“Gold Prices Slide to Two-Month Low,” WSJ, 3/6/15.)

Gold finished the week down $45.70, closing at $1,168.70. Silver prices closed the week at $16.03, down $0.65.

McEwen: Gold to $5,000

Rob McEwen, chairman and CEO of McEwen Mining Inc., reaffirmed his bullish views to investors attending the Prospectors and Developers Association of Canada (PDAC) conference in Toronto.  

“Despite the poor performance of the gold price the last two years and predictions from numerous experts … that it will drop further, the famous gold entrepreneur maintains his long-held belief that bullion will head north instead — perhaps to US$5,000 an ounce…”

“[McEwen] pulled up charts showing the explosion in the U.S. monetary base since 2008, along with rising debt relative to GDP. He also noted that a New York condo recently sold for US$95 million, while a Gauguin painting sold for almost US$300 million.  ‘It sends a message that money is not that valuable anymore,’ said Mr. McEwen….” (“McEwen sticks to US$5,000 gold forecast,” Financial Post, 3/4/15.)

Top Hedge Fund Managers Favor Gold

“Given their level of success, these fund managers are worth listening to: James Rickards, Chris Martenson, Steve Henningsen, Grant Williams, and Brent Johnson.

James Rickards is chief global strategist at the West Shore Funds, editor of Strategic Intelligence, a monthly newsletter, and director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital…”

“The end result of current developments in the international monetary system will almost certainly be high inflation or borderline hyperinflation in US dollars, but this process will take a few years to play out…”

“I expect the Fed will not raise interest rates in 2015 due to US economic weakness and because they do not want a stronger dollar. When that realization sinks in, the dollar should move lower and gold higher when measured in dollar terms.

“The looming global shortage of physical gold relative to demand also presages a short squeeze on the paper gold edifice of futures, options, unallocated forward sales, and ETFs. The new bull market will be kick-started when markets realize the Fed cannot raise rates in 2015 and when the Fed finds it necessary to do more quantitative easing, probably in early 2016…”

Steve Henningsen is chief investment strategist and partner at The Wealth Conservancy in Boulder, CO, a firm that specializes in wealth coaching, planning, and investment management for inheritors focused on preservation of capital…”

“I cannot remember an asset more maligned than gold is currently, as to even admit one owns it receives a reflexive look of pity. While most have left our shiny friend bloodied, lying in the ditch by the side of the road, there are signs of resurrection. While I’m doubtful gold will do much in the first half of 2015 due to deflationary winds and could even get dragged down … should global liquidity once again dissipate, I am confident that our central banks would again step in (QE4?) and gold should regain its luster as investors finally realize the Fed is out of bullets.
The wildcard I’m watching is the massive accumulation of gold (and silver) bullion by Russia, China, and India, and the speculation behind it. Should gold be announced as part of a new monetary system via global currency or gold-backed sovereign bond issuance, then gold’s renaissance begins…”

Grant Williams is the author of the financial newsletter Things That Make You Go Hmmm and … the portfolio and strategy advisor to Vulpes Investment Management in Singapore….”

“Whether it be Russia, Greece, the plummeting crude oil price, or a loss of control in Japan, there are a seemingly never-ending series of situations, any one (or more) of which could suddenly erupt and matter to a lot of people at the same time. Throw in the possibility that a Black Swan comes out of nowhere that nobody has thought about (even something as seemingly trivial as the recent hack of Sony Pictures by the North Koreans could set in motion events which can cascade very quickly in a geopolitical world which has so many fissures running through it), and you have the possibility that fear will replace greed overnight in the market’s collective psyche. When that happens, people will want gold…”

“We have already seen the beginnings of monetary policy divergence as each central bank begins to realize it is every man for himself, but if that sentiment spreads further into the gold markets, it could cause mayhem. Keep a close eye on stories of further central bank repatriation—there is a tipping point somewhere that, once reached, will light a fire under the physical gold market the likes of which we haven’t seen before, and that tipping point could well come in 2015.” ("What Top Hedge Fund Managers Really Think About Gold," Market Oracle, 3/4/15.)

Gold “Maintains Your Purchasing Power”: Sprott

Sprott Global Resource Investments, Ltd. founder Rick Rule explained why gold continues to be a store of value for investors.

“’I personally see gold as a safe have asset… I’ve seen a room at Motel 6 where an ounce of gold would by you 6 nights, and now an ounce of gold buys you 16 nights. That’s what gold is supposed to do… If you have held gold as I have over decades you understand that gold’s real role is to maintain your purchasing power. For people like me, gold hasn’t disappointed at all.” Rule adds that he sees gold as a good store of value.” (“Why Gold Doesn't Disappoint Rick Rule,” Kitco, 3/5/15.)

American Advisor Week In Review

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program: Learn why analysts are optimistic about the price of gold and why they feel this dip is a great buying opportunity. Listen to the show below:

 

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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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