Today acclaimed money manager Stephen Leeb spoke with King World News about a coming move in gold to $12,000 and a mania in the gold shares. Leeb, who is Chairman of Leeb Capital Management, had this to say: “It’s already been reported that John Paulson and George Soros have just increased their gold holdings. Paulson, in particular, is really betting the house on gold. I believe gold now comprises 44% of Paulson’s fund. Soros, who also knows a thing or two about macro-economics, added a pretty big chunk to his gold holdings.”
Stephen Leeb continues:
Stephen Leeb continues:
“So we have some very savvy
investors moving heavily into gold. We also have people like legendary
value investor Seth Klarman, that are aggressively increasing their
positions in the mining shares. Klarman’s firm has one of the best
track records of any fund around for the last generation.
“You’ve got a lot of smart people making very, very substantial bets on gold.
Market action over the past
couple of days has been surprising to me. For quite some time,
whenever we would see a strong economic statistic, gold would selloff.
That hasn’t been happening lately. We are seeing more inclinations to
bet on inflation going forward.
We have bonds weakening
significantly in the US today and gold is trading higher. The gold
price is really starting to anticipate the next wave of inflation. I
have maintained for some time now that this bull market in gold, that we
have seen so far, has just been the first leg of a market that is
anticipating inflation.
It’s starting to feel like
the bull market is now going to expand. Once we start to really see
inflation take off, you are going to see gold rocket higher. Gold has
done what it has so far with a combination of inflation and deflation.
When we start to see inflation really ignite, that transition in gold is
going to be something to behold. Gold holders are in a very strong
position now, with very little downside risk.
We are going to see things
in the gold market that we haven’t seen since the 1970s. Keep in mind
that the whole move during the leg of that bull market, from 1976 to
1980, was an inflation move in gold. There was no real period of time
where we had all of these monetary aggregates build up. We just went
into very serious inflation.
Gold, between 1976 to 1980,
went from roughly $100 to $800. Well, if you do that kind of math for
gold over the next four or five years and you multiply $1,600 by a
factor of 8, that takes the price of gold well over $12,000.”
Leeb also added:
“I just want to help people here and my message is to own gold. But
again I have to say something about these junior gold stocks. For these
major gold companies that are looking to replace their reserves, they
are going to have to start buying the quality junior gold companies.
Investors can expect to see a lot of acquisitions.
I would prefer for
investors to own these juniors because the quality shares will end up in
a mania at some point. The last leg of the 70s bull market saw
incredible gains in junior mining shares and I expect the same thing
this time around. The bottom line is this is an ideal buy point for
gold and the mining shares. As I said, there is very little downside
and enormous upside potential.”
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