The TIME HASN'T YET come to sell Gold Investment holdings, says a leading investment strategist at one of Europe's largest banks today.
"Some would say the time to sell gold is now," writes Societe Generale strategist Dylan Grice – co-author of the French investment bank's much-followed Popular Delusions analysis.
"Gold just isn't the misunderstood, widely shunned asset it was a few years ago. Isn't the [ Gold Investment ] bull market now long in the tooth, with better opportunities to be found elsewhere?"
But "The reason I own gold is because I'm worried about the long-term solvency of developed market governments," says Grice, warning that "the political winds in countries with central banks are a long way from blowing in the direction of fiscal rectitude.
Nodding to recent comments from US Federal Reserve chairman Ben Bernanke – whom Grice has long likened to Weimar Germany's Rudolf Von Havenstein for printing money – which some analysts think hint at an end to Quantitative Easing, "Talk is very cheap and no one is yet close to walking the walk," Grice goes on.
Cutting government debt "remain[s] politically unpopular because we haven’t had our crisis yet. Until [then], the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold."
Grice has repeatedly advised a strong Gold Investment position to SocGen clients in recent years. At the record-high prices achieved in early fall 2011, his analysis claimed that "fair value" for the metal would put gold at $10,000 per ounce.
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