Invest in Gold – Hedge Fund Managers Tell You Why

There are a variety of reasons why people invest in gold. 

Some are paranoid about the staying power of paper currency while some believe gold to be immune to deflation. 

There are also a variety of ways in which people hedge their investments. 

It was probably only a matter of time before gold and investment hedging came together, and several prominent hedge-fund managers endorse the practice.

First, The Price Of Gold Has Gone Up—Considerably

In the last five months, gold prices have gone up nearly 20%–a staggering amount. 

GCM6 is up .24%, and the World Gold Council says that demand for gold has increased by 21% in recent months. 

These numbers indicate a trend far too large to ignore, even for those who are not gold aficionados or who have yet to invest in gold.

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The Dollar Being Relatively Weak May Be A Factor In The Rising Of Gold’s Star

Colin Cieszynski of CMC Markets cites the fact that the US Dollar Index has declined to 94 or 95 after December’s peak of 100. 

He says that in the long term, the value of gold may continue to climb, though he cites certain geopolitical events in opining that gold’s value will be somewhat unpredictable in the short term.

Regardless, people may be more hesitant to invest in gold or to put their money into dollar-based investments.

All The Positives About Gold Have Caught The Attention Of Both Hedge Fund Managers And Commodities Investors, Including:

• Stanley Druckenmiller, head of Duquesne Capital
• Paul Singer, Hedge fund manager
• Dennis Gartman, commodities investor

Stanley Druckenmiller On Gold

Stanley Druckenmiller, to borrow the current market slang, claims to be bullish on gold. 

He is, of course, naturally bearish on everything else.  He feels that the Federal Reserve has unwise monetary policies and that the corporations carry too much debt to be wise investments.

He believes global equity to be unstable and holds that its volatility is beginning to lean toward the negative. 

Usually, gold performance has an inverse relation with equity market performance.  The global instability and negativity may be another reason for gold’s resurgence.

Furthermore, as Druckenmiller believes that the equity market will continue to be unstable for some time, he is currently investing in gold.

Paul Singer On Gold

Paul Singer points out that this has been gold’s best few months in 30 years, and he believes it is merely the start of a long-lasting uphill trend for the metal as an investment. 

He says that central banks are harming their currencies, and investors are beginning to notice that they are doing so.  He suggests that gold is what those investors will turn to as they lose faith in the central banks.

He also believes that as the number of investors who no longer believe in central banks grows, gold will grow as a viable investment.

Singer is so confident in gold as a prospect that he is backing a venture that makes various forms of investment in the mining industry.  The venture’s leader will be Barrick Gold Corp’s Shaun Usmar.

Dennis Gartman On Gold

Dennis Gartman goes beyond telling people that he himself is investing in gold. 

He outright urges his audience to buy gold. 

While he stresses that he is not one of those folks who believe that Armageddon is on the way, he does think that as long as central banks are lowering interest rates, the upward trend of gold will continue.  

Goldman Sachs—The Dissenting Voice

Goldman Sachs believes that investors leaping to buy up gold due to mistrust of stocks are jumping the gun. 

It believes that the price of gold will go back down again.  It also states that the chances of a serious recession in the U.S. are only 15-20 percent.

Goldman forecasts that gold will be a mere $1200 an ounce three months from now, $1180 six months from now, and down even further to $1150 a year from now. 

It also addresses fears of continuing low-interest rates with the prediction that the Feds will almost certainly tighten in September, and may even do so in July.

Regardless of the validity or falsehood of these predictions, gold prices indicate that many people are clearly not taking Goldman Sachs up on its advice.

To Hedge Or Not To Hedge

It is clear that interest rates around the world are low, and some are continuing to lower. 

It is unclear when the Federal Reserve will tighten the market next, or how the S&P 500 will behave moving forward. 

However, it is also unclear how gold will behave in the next few months.  Like anything else in the stock market, it is a wonderful gamble, and each investor has both the freedom and the curse of choice.