Did You Miss The Gold Train?

By Peter Costa

As gold continues to break record highs is it to late to invest in the precious metal? This is an enormous question on many investors minds especially the average household investor who is looking to preserve their assets from further devaluation of the dollar. Based on plentiful research, I have come to the conclusion that gold has just started to take off and this could possibly be one of the best times to buy gold while it is still sitting at just over $1000.00 an ounce.

What made me come to this abrupt conclusion? Copious economic factors and the current prospects that are buying the yellow metal. If you ever need an indication of where things are heading in an economy look to see what hedge fund managers are doing. In the past many hedge fund managers have made accurate decisions based on their idea of where things are heading and have come out on top because of it. For instance renowned hedge fund manager David Einhorn warned about Lehman Brothers failing and made billions from the collapse. John Paulson of Paulson & Co. predicted that subprime mortgages would falter and made a bet against it which put billions in his pocket. If hedge fund managers have been right in the past about economic turn out then I wonder what decisions and bets they are making in the current market place. In a recent survey carried out in the United States it found that 20 out of 22 hedge fund managers interviewed were buying gold to protect their personal wealth against excessive inflation. With hedge fund managers pumping billions into the gold market it is safe to say that you are not too late and that there could not be a better time to buy gold .

Who are the major hedge fund managers driving up the price of gold ? Let’s start out with renowned investor John Paulson of Paulson & Co. whose hedge fund oversees just over $29 billion. Currently he has over 50% of his fund in gold or gold related investments and just plunked down $1.3 billion for an 11% stake in AngloGold. David Einhorn of Greenlight Capital has been a frequent purchaser of the GLD fund and in a recent decision sold his entire 4.2 million shares which amounted to 420,000 ounces of gold in favor of holding physical gold. Michael Avery, who helps manage the $22 billion Asset Strategy funds of firm Waddell & Reed says his fund currently holds 15% of their money in gold bullion, which amounts to roughly $3.3 billion. Marc Stern, who helps oversee $55 billion as chief investment officer at Bessemer Trust, has about 1% of those assets, or $550 million, in gold as part of a hedge against future inflation, along with other anti-inflation investments. Eric Mindich who became the youngest partner of Goldman Sachs is running a hedge fund with over 6 billion dollars and has been purchasing large quantities of gold.

“In 5,000 years of human history, gold has been the currency of choice, the store of value, when humans have called into question their governments’ efforts to solve problems by running printing presses and injecting money into the economy”, says Michael Avery of Waddel & Reed. David Einhorn last week told a New York investment conference that, before the financial crisis began in earnest last year, he shared the skeptics’ view of gold as a metal of little intrinsic value outside dentistry, jewelry and some specialized electronics uses. “The recent crisis has changed my view,” he said.”My instinct is to want to short the dollar,” Mr. Einhorn said. “But then I look at the other major currencies. The euro, the yen and the British pound might be worse. So, I conclude that picking one of these currencies is like choosing my favorite dental procedure. And I decide holding gold is better than holding cash.” Ronald Fricke of Regal Assets stated last week that things are only going to grow worse in the U.S. economy and while it is still early individuals need to add gold to their portfolio so they can start protecting what wealth they have before inflation renders it useless.

David Einhorn said October.19th that his hedge fund is betting on the possibility of a major currency collapse and a surge in interest rates, citing ballooning government deficits in some of the world’s most developed countries. This is very alarming and speaks to the current state of the global economy. If renowned hedge fund manager David Einhorn is warning of a major currency collapse we should heed his warning and start protecting our wealth before it is to late. With so many hedge fund managers buying into the gold market I think it is safe to say that there is still time. The only question we should have on our minds is how much time do we have left. If you have not placed at least a percentage of gold into your portfolio you owe it to yourself to take the appropriate steps. Like all the investors who have taken action and purchased gold you will not be disappointed. The only thing you may be disappointed with is the fact that you did not put enough of your wealth in gold.

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