Tags: Hendry | gold | QE | long

Hugh Hendry: Fed Killing Gold Investments

Friday, 26 Oct 2012 08:10 AM

Eclectica Asset Management founder and Chief Investment Officer Hugh Hendry says the Federal Reserve’s policy of quantitative easing makes investing in gold less secure.

"I'll tell you my thinking," Hendry told attendees at the Buttonwood Gathering hosted by The Economist, the Business Insider reports. "That was a wonderful trade for five years leading to the end of 2008. It's been a profitable, but less predictable trade since the intervention of quantitative easing in March 2009."

Therefore, he said he is also short the Standard & Poor’s 500.

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"So there is an argument for market observations that quantitative easing has fortified the S&P versus the performance of gold, but that also may be from the beginning of 2009, gold was so fantastically ahead of itself," said Hendry, who is long gold and short gold mining equities.

"There is no rationale for owning a gold mining equity,” he noted. “It is as close as you get to insanity” because the risk premium goes up when the gold prices do and there is no valuation argument against the risk of confiscation.

"My only point to you is that I have resigned from the profession of undertaking of coin flipping,” Hendry told the audience. “I'm not going to tell you where gold is going to be. I have no idea. I'm a student of existentialism. … I just want to enhance the probability that I make money come what may."

Reuters reports that gold rose after a drop to seven-week lows, with a rising euro and prospects of further monetary stimulus lending support to prices.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

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Eclectica Asset Management founder and Chief Investment Officer Hugh Hendry says the Federal Reserve’s policy of quantitative easing makes investing in gold less secure.
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2012-10-26
 

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