Monday, February 9, 2009
Gold and Bonds
"Treasuries don't make sense at these levels. ... Because of their low yields, government bonds are a trap. ... We're a worse credit than Germany, and a least a few other countries. ... Countries default in a number of ways. They default by inflation. ... Ireland and Iceland are examples of economies that have gone too far. The U.S. has had the benefit of being the world's reserve currency. How much longer can we abuse it? Probably not too much longer. ... Perhaps the biggest question for the next few years is whether the dollar can hang onto its reserve-currency status. ... When you see a single-A or double-A-rated California muni yielding 6% to 7%, you should anticipate Uncle Sam will bail out Dear Arnold", Bill Gross interviewed by Lauren Rublin at Barron's, 19 January 2009.
"My one recommendation for the longer term is physical gold. ... Gold is the only currency that won't get devalued. It will be revalued. If the Fed's liabilities had to be covered in gold, it would sell for more than $6,000 an ounce. We aren't going back to the gold standard, but the markets won't trust the central banks anymore. ... Gold will stay in a bull market. It can't be manipulated like a currency you can keep printing. ... You can sell it, but unlike a currency, you can't make it out of thin air. You have to dig hard to get it out of the ground, and there is a limited quantity available. ... If you're a little more adventurous, you can buy gold stocks", my emphasis, Felix Zulaf (FZ), interviewed by Lauren Rublin at Barron's, 19 January 2009.
Quoted without comment.
FZ is president of Zulaf Asset Management in Switzerland. I disagree, FZ, we are going back to the gold standard. When? After all currencies collapse including the: dollar, euro, pound, yen, etc., and price gets high enough. The monetary base at last reckoning was $1,742,684 million, with 261.5 million ounces of gold to Uncle Sam's credit, that's $6,664 an ounce. Gold is cheap!