24 May 2018
by Chris Marcus, Miles Franklin:
For years the mainstream investment world has looked on anyone who talks about gold and silver as if they are some sort of conspiracy theorist who just doesn’t understand the markets. Yet evidence continues to emerge that this perspective is quickly changing, as another investor made the news this week for investing half of his wealth into gold.
According to Bloomberg, Egyptian billionaire Naguib Sawiris recently put half of his $5.7 billion net worth into gold. And his reasons were simple enough.
He said in an interview Monday that he believes gold prices will rally further, reaching $1,800 per ounce from just above $1,300 now, while “overvalued” stock markets crash.
“In the end you have China and they will not stop consuming. And people also tend to go to gold during crises and we are full of crises right now,” Sawiris said at his office in Cairo overlooking the Nile. “Look at the Middle East and the rest of the world and Mr. Trump doesn’t help.”
Nothing he says here is likely new to longtime readers of the Miles Franklin blog. Yet what is new is his large chunk of money into the market. Especially because he is hardly alone.
In past weeks I’ve written about Turkey and Hungary repatriating their gold, and how fund managers like Jeffrey Gundlachhave also been investing in gold. Anecdotally I have heard of other money managers who are doing the same. And given the often copycat-like mentality that exists on Wall Street, you would think that others are noticing what’s going on, which could lead to additional interest.
So far we haven’t seen this reflected in the price. But remember that you’re dealing with a manipulated market. Which can make things confusing if you haven’t factored that in.
We’ve seen blow after blow against the dollar delivered over the past couple years while the precious metals prices have stagnated. But that doesn’t mean that the developments are not happening. And what always seemed to me to be the most likely ending to the manipulation is either if the banks became net long (owners of) metal, if there was a financial reset, or if there is enough money and interest pressuring the market.
Obviously the break point has not occurred yet, but when you think about what might lead to that, it’s exactly what’s happening now.
Additionally, as you may have already experienced yourself, one of the biases to the precious metals crowd is that once they understand the reasons to own gold or silver, they’re often willing to invest for the long-term. Because once you finally grasp the the reasons to own metal and the flaws with the paper currency system, they don’t change. Except to become more pronounced.
It’s been a long 7 years for those who realized what the Federal Reserve was going to do and responded in what seemed like intelligent fashion. Yet later we found out the game was rigged.
But that doesn’t mean it can stay rigged forever. And if the trend of growing gold demand should continue, the point where that bet finally pays off in grand fashion will be rapidly approaching.
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