Paul Singer Says Buy Gold, Warns of Crash

Posted | 14/06/2016 / Views | 4364
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Fortune magazine described billionaire hedge fund manager Paul Singer as one of the "smartest and toughest money managers" in the hedge fund industry.  You don’t amass $2.1 billion in personal wealth as a dill.

Over the weekend Paul Singer joined the chorus of billionaires of late (like Soros, Icahn and Druckenmiller) warning of a financial crisis, going short shares and buying gold.  Here’s a bit of what he had to say:

On central bank stimulus such as quantitative easing (printing money), zero and now even negative interest rates:

“It started out as all bond buying, but now it’s leaked into equities. The result of all that — I call it monetary extremism — is that the economies have held up and had some growth, but that growth has been tepid, with the biggest gains going to those who own financial assets while wage growth has been stagnant.”

We’ve written before, and talk often of it in the podcasts, of this enriching the rich at the expense of low and middle class – the inequality effect of monetary stimulus.  It is the biggest driver for Trump’s success and it could be a big sleeper in how this all unfolds.  Trump being elected for a start…

Singer goes on to say (emphasis ours):

“The cure for the crisis — for the debt crisis, the financial crisis [GFC] — has been deemed by the developed world governments to be more debt. There has not been a deleveraging. And after seven and a half years and counting of this mix of policies, at the moment we’re either in a stage of stagnation or rollover, possibly in the early stages of a global recession. So I think it’s a very dangerous time in the financial markets.”

And on investment?

We’re very bullish on gold, which is the anti–paper money, of course, and is under owned by investors around the world. And we are very sceptical about markets. We hedge every equity position. We’re not in the mood to be surprised — surprised in the sense of losing large amounts of money — ever, but in particular now with this extraordinary and unprecedented situation where the stability of financial markets is so dependent on confidence in policy makers and central bankers.”

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