Print more Dollars and watch the price of metals continue to climb into the stratosphere. In the near future there will be talk of new record highs, while accurate in dollars, as adjusted for inflation we are well below the highs in the early 80’s. John Paulson the founder and president of Paulson & Co., a New York-based hedge fund, told Les Echos, Over time, the price of gold will rise in proportion to the creation of paper dollars. In an inflationary environment where the demand for protection increases, the price of gold can rise even further.
Paulson commented further on fiat currencies with, In these times of uncertainty for paper based currency, I feel more secure in holding gold. Given the risks of inflation in three to five years and the volatility of the euro, gold offers good protection against the paper currencies devaluation and even the possibility of generating a return on fixed investment. As one of the best fund managers over the last 7 years, his bullish position in gold has allowed for some of the largest gains in the history of hedge funds.
We often talk about gold as a safe-haven for investors to protect a portion of there total net worth. There are a number of forces that contribute to golds safe-haven status; demand, inflation & global unrest are just a few. Paulson gave his thoughts on this, Historically, gold has always been a safe haven against inflation and a safe haven in times of political instability. Today we face both risks.
To read the entire interview: Zero Hedge -John Paulson’s Complete Les Echos Interview