Four reasons the smart money is selling gold (and why they won’t be back)

Frik Els | August 2, 2013 | 9:15 pm Energy Precious Metals Gold 

CNBC interviewed Anthony Scaramucci, managing partner of SkyBridge Capital, on the reason why hedge funds are selling gold and why he believes the smart money won’t be returning any time soon:

Scaramucci believes that “when they write the history of this period,” financial historians will remark that “gold should’ve worked, it could’ve worked, it would’ve worked, but it didn’t work in this environment.”

The four reasons according to Scaramucci why hedge funds have exited the market are:

  • Central bankers are exercising caution on inflation and the risk of Weimar-style hyperinflation is just not there.
  • Deflation has become a risk and “as each dollar becomes more valuable, the dollar value of gold drops.”
  • The Fed won’t sell its bonds thanks to the institution’s very long time horizon and the absence of a bond bubble is negative for gold.
  • Economic growth would hurt gold “because rising rates make gold, which does not produce yield, even less attractive in comparison to bonds.”

Watch the video at CNBC.

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13 Comments

  • undeRGRound

    SMART MONEY???
    He who laughs last, laughs LOUDEST!
    The writing is so ridiculous that I feign to watch the video.
    Real nihilist, this Scarmucci guy! LMAO!

    I’ll comment further, if needed, after the video, and a likely vomit session…

  • Dale Holmgren

    Staggering ignorance by this young man Scaramucci. All you have to do is look at 1970’s bond rates rising with gold rising to push back against his idea that rising bond rates are negative for gold. Rising bond rates will actually herald the arrival of gold into the main arena; as bondholders lose money with rates going up, and fleeing the fixed income market, gold will be a natural beneficiary.

    • Chris Lamar

      hmmm
      And you are more qualified because’?

  • Prometheus

    Must be related to Pinocchio. Gold is the policemen of the over printed paper Fiat money

  • Gerry

    A stupid little mind in his own stupid little world. Mr Scaramucci ,there is a very big world out there ,six and a half billion people who do not know what a bond is ,they will be setting the price of gold over the next couple of years ,as you the USA and their FED drown in their self made scess pool of reserve petrodollar fiat currency.

  • the dude

    Looks like a real estate agent. Stick to selling houses

  • Larry

    The “smart money” ??? Oh, right…is that the same smart money which so often loudly says one thing but privately does another ? This manis talking purely from a Western liberal establishment point of view…and totally ignores the huge market for gold in the East.

  • Ricky 3

    You stupid boy!

  • Frankinca

    CNBC sells stock #1, the easiest to buy investment vehicle and the one with the most sales people. A distant second are bonds and fixed investments. Third is real estate, which requires a broad audience with little RE knowledge and finally commodities of which oil is king. I have come to the conclusion that the guests are part of a dual advertising scheme, where the guest pays something to be exposed on CNBC and the originator CNBC is gaining credibility by bringing on high level, financially titled people. Both are trying to gain income, the guest by advertising his organization to more potential buyers and CNBC by gaining more watchers and upping their advertising rates or charges to the broadcast operators. Clearly, they don’t base a guest by any standard except to be paid for their performance or informed by a publicly spirited financial celebrity to gain respectability. We have to sit and listen to Maria and her cohorts espouse their preferences so that occasionally we learn something they accidentally spilled. It is frustrating that gold and precious metals are getting a bad rap, but the central bankers are doing everything in their power to discredit gold and silver as safe heavens for ones hard earned money. We know the truth and we have to advertise in every way possible our truth, and to discredit their lies and promotion of fiat money symbols. The US dollar is on the way down as far as I CAN SEE, BECAUSE WE ARE A BIG DEBTOR NATION AND thus making THE Swiss FRANC a BETTER RESERVE CURRENCY THAN THE US DOLLAR. Only the lack of quantity has limited it’s value as the western world’s reserve paper. (Please excuse the caps stuck sentence). Oh, a request, vote for me on facebook and discus, if you dare!…. I am a silver bull because my wallet is silver lined, however I am a Gold dreamer and a Colombian gold promoter..

  • Apple

    This is a Euro and US centric article and is largely based on the trading of paper gold. Completely misses the knowledge that the largest buyers of physical gold, real gold are in China and India.

  • Wazdog

    Anthony Scaramucci, will EAT his own words in 3 yrs time! What a shallow ignorant assessment!

  • David_R59

    Hedge funds may be selling gold; but individuals around the world and Asian central banks are buying.
    “The Fed won’t sell it’s bonds…the absence of a bond bubble…” ?? This little statement proves this article is like the blind leading the blind.
    I agree there’s huge deflationary forces at work in the Western world, but gold is not used for inflation protection. It’s a hedge against dangerous forces such as societal upheaval and economic collapse.

  • Voldemort

    Kind of makes sense actually BUT I see China hitting the skids big time..That should affect a further deflation Hence…..

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