BUYING GOLD right now is – thanks to central bank policies such as quantitative easing – "like betting at a casino where the odds are slightly stacked in your favor", a leading fund manager said this week.
"Quantitative easing is a new buzzword for a very old process," Dr. Graham Birch, former managing director at BlackRock, told an investment conference in London.
Birch argued that QE extends a practice that goes back nearly a century.
Anyone who exchanged Pounds Sterling for Gold Bullion in 1919 – the year the Britain abandoned convertibility of Pounds into gold – would have benefited from "the best single commodity trade in world economic history."
Five gold sovereigns would, at Friday's London Fix price, be worth £1,117.68
Holding cash, meanwhile, would have been "virtually a total wipe out".
"When central banks took gold out of circulation in exchange for paper the citizens were robbed blind."
Buying Gold today is not cheap, Birch cautioned, owing to recent price rises. But, he argued, "investment in real assets during a period of negative interest rates stacks the odds in your favour...quantitative easing is [an investor's] best friend."
Buying Gold can also act as an "insurance policy" against inflation, central bank actions and currency weakness, Eugen Weinberg, head of commodity research at Commerzbank, told the same conference.
Marcus Grubb, managing director of investment at the World Gold council, pointed out that during the last 20 minutes of his speech, gold mines had produced around $6.6 million of bullion – while the US had created over $20 million of new currency.
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