The founder of a major hedge fund has today (March 9th) claimed that Investing in Gold is a prudent move, regardless of how the economy fares in the coming few years, the Financial Times reports.
David Einhorn, who set up the Greenlight Capital fund, hit the headlines last year after revealing that he shorted Lehman Brothers before its collapse as he felt it was too exposed to the declining property market.
In a note to investors, he has now advised Buying Gold as he is concerned about the Fed's response to the economic crisis but believes the yellow metal will flourish, whatever the outcome.
He is quoted by the newspaper as writing: "The size of the Fed's balance sheet is exploding and the currency is being debased. Our guess is that if the chairman of the Fed is determined to debase the currency, he will succeed.
"Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself."
Those comments were supported last week by Peter Opie, first vice-president of Merrill Lynch Global Wealth Management, who explained that gold should form part of any investor's portfolio.
"We think that gold should be between two and five per cent of any portfolio. It's a hedge against everything - deflation, inflation, doom and weakening currency," he told My Small Business.
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