GOLD ENJOYS RESURGENCE AMONG VARIETY OF INVESTORS

The New York Times reports that global concerns about inflation, deflation, government borrowing, and sovereign debt have led private and institutional investors across the spectrum to develop “gold fever” as they seek an “age old refuge” from these economic crises. The Times article noted that gold’s major supporters include liberal financier George Soros, Fox News personality Glenn Beck, and top New York hedge fund manager John A. Paulson who earned billions betting against subprime mortgages.

Among the people now moving to gold is Daniel J. Arbess, who manages more than $2 billion for a hedge fund. According to the Times, Mr. Arbess would not have taken a second look at gold a few years ago. Now he’s a firm believer because of the risk to “fiat” currencies, i.e., currencies which are not backed by gold.

“‘Indebted countries may soon be forced to choose among three politically difficult alternatives: sharp cuts in expenditures, debt default or printing money to pay off debt,’ he said, with the last option the most likely outcome. Gold, he said, is a logical hedge against this risk, because firing up the printing presses ignites inflation.”

(June 12, 2010, The New York Times, Uncertainty Restores Glitter to an Old Refuge, Gold)

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