John Paulson: Gold’s Bull Run Is Just Beginning
Mr. Paulson is not just talk but he is putting his and investors money where their proverbial mouth is. These last couple days, gold has tried to sell off just to see it come back strong and eek out a small gain each day. Even silver jumped over $1.00 in the same period. The key is too see if the Dow Jones can make news highs, if it does not then we could be seeing a top and then a decline. At this point it looks like the path is only higher for gold.
Seeking Alpha - John Paulson, lionized by many investors for his winning bet on the fall of the housing and financial markets, is now getting aboard the gold wagon.
The hedge fund manager told his investors that even at $1,150 an ounce, the bull run on gold is just beginning, according to the Wall Street Journal.
His firm, Paulson & Co., plans to launch a fund January 1st dedicated to gold mining shares and other bullion related investments, the newspaper reported.
Mr. Paulson, who is estimated to be worth about $6 billion. His bet against real estate and banks between 2007 and 2009 reportedly netted his hedge fund about $20 billion.
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Video: Rep. Mark Kirk says China may be purchasing $80 billion in gold bullion to increase reserves
Editor’s Note: Admittedly, Fox News is not my favorite news organization. This video of an interview on Fox is pretty good and Republican Representative Mark Kirk from Illinois gives a pretty solid perspective of some of the debate that are happening in Washington and globally about the U.S. dollar and China as our largest creditor. The omission that China is going to buy $80 billion in gold bullion says a lot about their inflation expectations in itself. To put that into perspective, if you purchased that amount a current price ($920.00/oz.), that would equal 2,717 tonnes of gold bullion. According to the World Gold Council, that would outstrip an entire years mining production for the entire globe. If that is not some indication about our current situation and what is expected for inflation, than what else do we need? Enjoy the video.
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Chinese Increase Gold Bullion Reserve by 454 tonnes on Dollar Concerns
This is a structural change in the perception of Gold’s role in the international finance community. Gold has a track record of providing a safe-haven for wealth in times when governments are taking actions that devalue a countries currency (read: money). This trend is sure to continue as long as these global policies of quantitative easing continue (read: money printing).
The biggest threat is if we see a recovery from this massive stimulus is a heavy dose of inflation that changes the perception of the public’s thoughts on inflation. This can lead an economy down the road to hyper-inflation as the public loses confidence in the currencies’ ability to hold value.
News (Business Wire):
News that China has increased its gold holdings by more than 75% is a clear indication of the critical role that gold plays in central bank reserves, World Gold Council said today.
Welcoming the announcement by China’s State Administration of Foreign Exchange (SAFE) that the country’s official gold reserves have risen from 600 tonnes in 2003 to 1,054 tonnes, the CEO of World Gold Council, Aram Shishmanian, said:
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Gold mining stocks attractive in turbulent times
No doubt, in times of currency devaluation, gold asserts itself as a store of wealth and a secondary reserve currency. I have followed this sector and it is following the 7 year bull trend that gold has shown. It looks like between now and the end of next week, gold will make another shot to top $1,000/oz. Time to protect your wealth before is gets debased through all our bailout and stimulus activity.
News:
The prospects for equity markets and numerous sector indexes have dimmed during the global recession, but gold and the companies that mine it have not lost their luster.
With gold prices nudging their all-time high and energy and other costs falling, mining company profit margins are widening, making their shares attractive, analysts said on Thursday.
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Merrill Lynch says wealthy individuals turning to gold bars for safety in uncertain times
Historically, gold is the safe haven investment from financial and political instability. Yes, it does not pay interest and that is why in our modern world, it seems to be shunned at every possible turn. The failing, is that people don’t seem to understand that it is a store of value (wealth) and that is its natural role and has been for at least 6,000 years or more.
Gold does not have any built in liability to anyone, it is rare and it takes work to get out of the ground. All of these make it so no matter what happens in the real world, no one will be able to tell someone that their gold is worthless and that is what makes it such a great store of wealth. With the type of fiscal policies government across the globe are running, it should be no surprise that people are looking for this type of safety.
News:
Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or “paper” proxies.
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Citigroup says gold could rise above $2,000 next year as world unravels
Well we have seen a tremendous amount of money issuing taking place to try to save a reckless financial system in the United States . At some point this amount of currency will have to come to bear in the real market. People are calling for deflation everyday and to a point this is correct because of the huge gaping hole that has been blown into the credit markets from de-leveraging.
But once we do find a bottom, this massive amount of money will go into the market and you will see prices driven through the roof. Also because we rely on foreign creditors to buy our debt to issue our currency, we could see them lose confidence in our dollar and then we will see them jump away from the dollar and it would crash and that would drive prices up for Americans because we import much of our goods. They would price up their import goods because we have been so reckless in issuing our currency to bail out failing institutions that should of failed….period. Gold is money, not credit and it does not owe to anyone.
News:
The bank said the damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps that had never been tried before.
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Iran switches monetary reserves to gold bullion
This is just another instance of the mainstream press slowly talking about gold and its position as a tried and true form of money and protection of wealth. Once this crisis passes, I do see that a new currency will appear that will be either backed by gold or its exchange rate will be based on the spot price of gold.
With this debt-based fiat money system, we have gotten to the point where we do not have much real value behind it because we issue it too freely to fix symptoms of problems and not there causes. Iran is switching over because they want to make sure they have something of intrinsic value backing there reserves. With the current price, this is a pretty smart move on their behalf.
Release:
Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July.
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