This week’s top mainstream financial media gold-as-a-curiosity-story (see the highlighted sections below) comes via this item in the Wall Street Journal about a guy who manages school teachers’ retirement money in Texas. (Note that this story sounds awfully familiar, but no references could be found for it at the old blog.)
There are gold bulls. And then there is Shayne McGuire. The 44-year-old pension-fund manager from Texas, who spoke recently at a gold conference in Berlin, caused a stir among the roomful of gold aficionados. His provocation: A book that predicts the price of the precious metal could soar to $10,000 an ounce, more than seven times its current price.
Like those who once boldly predicted $1,000 Internet stocks and a 36000 Dow Jones Industrial Average, Mr. McGuire is a lone voice among mainstream investors suggesting such an outsize price jump in gold’s price.
Mr. McGuire’s view isn’t idle prognostication. He runs a $330 million gold portfolio at the Teacher Retirement System of Texas. Mr. McGuire’s forecast, which he made in the recently released book, “Hard Money,” makes him a very far outlier. Most on Wall Street consider the prediction outlandish.
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Not everyone at the Texas fund felt the same way. In one meeting, a pension executive sarcastically asked if anyone else in the room thought “the world was going to end?”
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“It doesn’t do anything but cost you charges and stare at you,” billionaire investor Warren Buffett said in a recent interview.His gold prediction is by far the most aggressive call he has made in his career, he says, but he says he ignores his doubters. “It seems like an aggressive call,” Mr. McGuire says, “but it’s really a comment on what governments have been doing to the monetary system.”Of course, the risks of such a big prediction can affect one’s entire career, much as it did former stock analyst Henry Blodget, whose bullish call on Amazon.com was lambasted after shares plunged in the dot-com bust. “
Yes, the dismissive tone is more evidence that there is probably a very long way to go for the precious metals bull market, but, gold going to $10,000 an ounce does seem like a stretch. Then again, you can get to over $6,000 an ounce simply by replicating the 1971 to 1980 move higher beginning at the cycle low of near $250 about ten years ago.
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First off Shayne McGuire has been saying this for some time.
He wrote “Buy Gold Now: How a Real Estate Bust, our Bulging National Debt, and the Languishing Dollar Will Push Gold to Record Highs” by Wiley in 2008
http://www.amazon.com/Buy-Gold-Now-National-Languishing/dp/0470185880
At the Barron’s Conference Felix Zulauf said you should have 20% gold and it will be $2500 in 3 years.
All the bad money has to flow into good money. This number is not impossible at all.
Gold at $10,000 and ounce isn’t unreasonable if a cup of Starbucks reaches $100. Or a loaf of bread, for that matter.
With no end in sight to federal deficits, and the obvious money printing to paper that over, how is $10,000 gold NOT in the cards eventually? It took an economic collapse to even slow it down to its current massive gains each year.
Debt accumulation and interest tends to grow exponentially. Ask anyone who’s ever run up charges on their 21% interest credit cards.
Both Warren Buffett and George Soros have “talked down” gold and/or silver in the past while quietly buying same in large quantities. Buffett’s words managed to drop the price of silver in half during a brief period in the late 1990’s while buying billions of dollars of silver. He then sold it at 2x his buy price several years later. Soros was talking down GLD a few years ago not knowing GLD had to or just did “because” publish their largest holders. They showed Soros owned billions in GLD ETF shares. Both have kept quiet about metals after being proven to be “market manipulators” to their benefit. At what level in $ do your words being opposite your deeds constitute illegal MM? Both pay at tax rates of under 1% but support administration’s jihad to “soak the working rich” with confiscatory tax rates on earned income. Be careful of both men. They only care about increasing their wealth. No different than most people but that they are somehow trying to help society is ludicrous.