One way to hedge against inflation is to buy gold and silver. This is what hedge fund legends John Paulson and David Einhorn are doing. As Justice Litle pointed out last week in Taipan Daily , Paulson and Einhorn “have gold and gold stock positions running well into the multi-billions for their respective funds.”
What if deflation wins? While we think the odds are strongly stacked against it, particularly given the government’s furious pace of money printing, the prudent investor understands – and respects – the time-tested adage, “Nothing is guaranteed.” So while our chips sit squarely on the spot marked “inflation,” what will happen to gold stocks if we’re wrong?
Remember the old expression, “I wouldn’t do that for all the tea in China.” People used to associate China with tea. Well, now it’s time to associate China with gold, and a lot of it. Because the Chinese recently announced that they control over 33.89 million ounces of gold for monetary purposes. That’s an increase of 75% in Chinese gold holdings over the past six years.
While gold had a big run-up in price during the three-month stretch that ended in late February, the yellow metal has subsequently dropped back a bit, as have the prices of the leading mining shares. If anything, however, the reasons for gold bullishness have intensified.
Leaving your money under your mattress isn’t exactly the safest bet. It doesn’t take a mathematician to figure out that government stimulus plans, bank bailouts, and lower interest rates all add up to inflation. If more money is circulating due to new spending measures, the value of each dollar –including the money under your mattress– goes down.
It’s a recession but Byron King tells us that it is not too late for gold investing. He has been encouraging gold bugs for over ten years now. Here he explains why owning gold and silver is the safest way to weather out this economic storm.
Someone sure was excited about Silver Wheaton Corp (NYSE: SLW) Tuesday morning. It gapped up 2% and kept rising from there.