Tags: George | Soros | Gold | Bubble

Soros: Gold Represents Ultimate Asset Bubble

By    |   Friday, 29 Jan 2010 09:45 AM

Hedge fund legend George Soros says that global stimulus programs to pull economies out of recession risk new bubbles.

Countries around the world have loosened fiscal and monetary policy in an effort to spark economic recovery.

The stimulus stirred fears of inflation, pushing gold prices up 40 percent last year.

They reached a record high of about $1,225 an ounce in November, though they have since slid about 10 percent.

"When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” Soros told reporters at the World Economic Forum, according to the London Telegraph.

"The ultimate asset bubble is gold."

Governments and central banks face a dilemma, Soros says. If they don’t tighten fiscal and monetary policy soon, all kinds of asset bubbles could expand to dangerous levels.

But if they withdraw the stimulus too soon, the governments and central banks risk prolonging recession, he says.

"I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the U.S. and Europe, have plenty of room to increase their deficits.”

Not everyone agrees with Soros on gold.

David Tice, chief bear market strategist at Federated Investors, says the exploding U.S. debt burden will push the precious metal to $3,000 an ounce.

"We certainly could have a pullback," he told Yahoo. "However, we believe this rally in gold is going to on for a long time."

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Hedge fund legend George Soros says that global stimulus programs to pull economies out of recession risk new bubbles. Countries around the world have loosened fiscal and monetary policy in an effort to spark economic recovery. The stimulus stirred fears of inflation,...
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2010-45-29
Friday, 29 Jan 2010 09:45 AM
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