Which US presidential candidate does gold prefer?
Gold loves chaos and should be hitting new highs, especially with inflation coming down and with it, two rate cuts likely before year’s end.
Bill Gross, founder of Pimco, whose various funds oversee more than a $1 trillion in assets, at a February roundtable discussion at investment site Barron’s described gold as a “decent hedge” as central banks around the world continue with quantitative easing.
Gross puts his money where his mouth is and like your average gold bug has made a huge bet on the Federal Reserve’s QE program continuing for a long time still.
The $289 billion Pimco Total Return Fund’s exposure to Treasuries and Treasury-related securities and US mortgage debt, the favourite choice for purchases under QE, is 66% of the fund’s total assets.
Here’s what Gross tweeted today in response to gold’s fall:
Gross: OK, so I made a bad call at the Barron’s Roundtable. I would still buy gold here. World reflating.
— PIMCO (@PIMCO) April 15, 2013
Despite gold’s meltdown over the last two trading session, the metal is still up more than 60% since Fed chairman Ben Bernanke announced the first round of asset purchases under QE in December 2008.
The Fed’s balance sheet topped $3 trillion at the start of 2013 and is set to reach $4 trillion by the end of the year.
