300m Reasons to Buy Gold & Silver

300m Reasons to Buy Gold & Silver

We’ve been known to reproduce famous billionaire fund manager George Soros’s quote on how to make ‘real’ money from time to time.  As a reminder:

"Find a widely held precept that is wrong and bet against it". 

Many Wall St types are calling gold’s days as over.  Smart money is capitalising on that precept right now picking up ‘pet rocks’ (as one Wall St Journalist described gold) at bargain prices.

Topically, Soros’s ex right hand man Stan Druckenmiller, arguably one of the world’s most respected and successful hedge fund managers in his own right (making his fund an average 30% annual return from 1986 to 2010), is doing just that right now.  He just bought no less than $300m of gold!  That makes gold 20% of his total fund, its largest single position.  Why?  He says:

“…if you look at the real root cause behind the financial crisis [GFC], we’re doubling down. Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we’re doubling down on the same policy that really put us there…”

In other words all the central bank stimulus we keep talking about, inflating financial assets around the world beyond their fundamentals, are simply making the core issue of debt even worse than the GFC and setting markets at current heady heights set for an even bigger fall.

The chart below illustrates very clearly the value proposition between silver and US shares.  We think it is self explanatory and is a perfect depiction of what attracts smart money like Soros and Druckenmiller.