Gold is known as a solid inflation hedge, and could earn this reputation in 2013 if inflation picks up. Below are three well-known gold bugs and their bold predictions for investing in gold next year and beyond. Words: 525
So says Ryan Fuhrmann (http://commodityhq.com) in edited excerpts from his original article* posted under the title 3 Gold Price Predictions For 2013.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Fuhrmann goes on to say, in part:
The Federal Reserve’s stated mission is to provide “the nation with a safe, flexible, and stable monetary and financial system.” This has historically meant doing its best to keep inflation levels stable and low. It has achieved this goal for more than two decades now, but has decided to shift its focus a bit toward increasing the pace of economic growth. Other central banks across the globe have a similar stance, and this is worrying a number of market experts that it could eventually lead to high inflation.
“I am not selling my gold and silver…gold and silver will both go much, much higher over the course of the bull market.”
In the above quote, Rogers appears to be arguing that strong stock market returns will support higher gold prices, not so much because stocks are moving higher but because the potential exists for a market correction if and once the market falls. Rogers has been highly critical of expansionary monetary policy, which increases the money supply and can lead to asset bubbles, such as the stock market. [Also read: Jim Rogers: Situation to Worsen in U.S. and Lead to Social Unrest]
“As inflation picks up, the real price of gold goes up.”
Jeremy Grantham, who heads firm GMO that runs $97 billion in client assets, wrote the above in a Forbes article, also referenced the well-known Credit Suisse Global Investment Returns Yearbook that explained gold can be a great hedge against inflation. It attributed this to the simple fact that investors turn to gold during times of uncertainty and that this expectation becomes a self-fulfilling prophecy, meaning that this increased demand drives gold prices up. Interestingly, the study found that investing in stocks also offers an inflation-hedge and that stock returns have far outpaced gold returns over time. However, both asset classes have appeal during periods of inflation.
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“By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold.”
So far in 2012, Paulson has invested rather aggressively in gold-related assets, including buying the shares of gold miners and producers, as well as investing directly in the SPDR Gold Trust [Read: John Paulson Now Has 44% of His Hedge Fund’s Assets in Gold Stocks/ETFs! How Much Do You Have?]. His arguments echo that of both Rogers and Grantham in that he expects gold to rise if and once inflation accelerates, which could occur because of easy money thanks to expansionary monetary policy.
It’s important to note that these investors aren’t making a specific call that inflation will increase in 2013. They just expect it to accelerate at some point going forward. It could be as soon as 2013, or beyond that, though there is also of course the possibility that inflation levels don’t pick up that much at all.
*Source of original article: http://commodityhq.com/2012/3-gold-price-predictions-for-2013/
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
You think the problems are bad now? You wait until we don’t have any more credit. You wait until the currency is collapsing. You wait until interest rates are going through the roof and inflation is going through the roof. It’s not going to be a pretty picture. There will be social unrest. [See below for the link to the interview.] Words: 477
When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield and an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner. Our views are more nuanced and, we believe, provide a balanced framework for assessing value. Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies. [Here are the details of our analyses.] Words: 1316
Price is determined by demand and supply and, going forward, demand for gold may continue to rise, while supply will remain constrained as it has since the beginning of time. With this backdrop, let’s explore some specific reasons investors may consider buying gold at today’s prices. Words: 1315
In an environment of ultra expansionary monetary policies…the long-term trend for gold is higher and as inflation surges, gold will go ballistic resulting in the Dow-Gold ratio touching one. [Let me explain why that will indeed be the case.] Words: 760
Regardless of the size of your financial pyramid, without a core-holding foundation, you are building it on sand. Core holdings are for protection, not for profit. They function as insurance against a catastrophe. [Let me explain.] Words: 754
Do you own enough gold and silver for what lies ahead? If 10% of your total investable assets (i.e., excluding equity in your primary residence) aren’t held in various forms of gold and silver, we…think your portfolio is at risk. Here’s why. Words: 625
Today all currencies are fiat, that is, they are money only by government edict, by the law; they have no inherent value and are not backed by reserves. Because of this central bankers around the world can create/ print new money almost without limit, and as with all markets currency prices are set by the law of supply and demand, and as more dollars, euros, pounds and yen are created, their value falls. [Let me explain the ramifications of such action.] Words: 785
Why is it that the demand for gold moves inversely to interest rates – that the higher the rate of interest the lower the demand for gold, the lower the rate of interest the higher the demand for gold? [Let me explain why and what the future seems to hold.] Words: 1053
For these investors looking to make a play on this elusive metal, we explore below every nook and cranny of the investing world to offer 50 ways to play gold.
Gold is not a solution to investing problems. It is an insurance policy against an inflationary explosion. The higher the probabilities of inflation, the more gold I hold. [Let me explain.]
Closely-followed billionaire hedge fund manager John Paulson, who famously bet against the subprime housing market in 2007, released his 13F regulatory filing revealing that his hedge fund increased its stake in gold in the second quarter to 44% of his funds equity assets. How much do you have invested in physical gold, gold ETFs, gold mining shares and warrants?
There’s a bewildering amount of advice on how to invest…so it’s worthwhile, especially in today’s volatile markets, to take a look at what has actually worked, as opposed to what people claim works. We’ve collected some of the finest wisdom on markets from the most respected and successful investors, past and present. Words: 865