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Scott Minerd: Paper Money is 'Garbage,' so Buy Gold

Friday, 15 Jul 2011 08:06 AM

Mere talk that another round of quantitative easing could be on the way is making already weak dollars and other paper currencies even less attractive, says Scott Minerd, chief strategist at Guggenheim Partners.

That means investors would be better off running to gold, art, jewelry or pretty much anything else than paper currencies.

"We're in a 'beggar thy neighbor' era. Paper money is garbage at the end," Minerd tells CNBC.

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(Getty Images photo)
"It's a matter of relative values, about which garbage do you own."

The Federal Reserve recently wrapped up a second round of quantitative easing, known as QE2, in which it bought $600 billion in government debt held by banks with the aim of fueling lending and stock-market gains.

Critics say such policy weakens the dollar, which makes gold much more attractive, especially since other currencies like the euro of the Chinese yuan have been weak was well.

Fed Chairman Ben Bernanke has said that monetary authorities cannot rule out further easing measures, telling the House Financial Services Committee on the first of two days of Capitol Hill testimony that "we have to keep all options on the table," according to the Associated Press.

"I've gone on record early on that QE3 is a real probability," Minerd says. "I would almost say it is inevitable."

Bernanke's comments on Wednesday sent the dollar weakening and gold soaring to $1,562.30 an ounce.

"Even minor chatter about a third round of stimulus makes investors sell the dollar," says Brian Dolan, chief currency strategist with Forex.com, according to CNNMoney.

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Mere talk that another round of quantitative easing could be on the way is making already weak dollars and other paper currencies even less attractive, says Scott Minerd, chief strategist at Guggenheim Partners. That means investors would be better off running to gold,...
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