The legendary investor Jean Marie Eveillard (of the $50 billion First Eagle family of funds) spoke with King World News, here is what he had to say on the outlook for Gold and Gold Miners:
In this environment gold is far from being over-owned. Rachel Benepe, who runs our gold fund here at First Eagle, she was telling me the other day that if you take global pension funds, not just in the US but in the rest of the world as well, they only have .4% of their assets that are invested in gold. So gold is far from being over-owned.
Gold today should be seen as a currency, none of the major currencies being appealing. The are an enormous amount of debt claims throughout the world, which by comparison with gold at $1,800, the entire amount of gold above ground equals ten trillion dollars, including incidentally half of that being in the form of jewelry.
By comparison with the ten trillion dollars of gold in the world, the financial claims are much, much higher, so it is still a case of too much paper, most of it dubious and I believe too little stuff, stuff being gold.
Gold will continue to rise as long as monetary authorities continue to do what they have been doing, which is an automatic reflex in a pure paper system, which is to print more money.”
When asked about the mining shares Eveillard replied, “I think they have lagged long enough and we are reaching the point where if the price of gold stays at $1,800 an ounce or even goes higher, then the mines will begin to coin money and dividends will be increased.
So I think there is an opportunity there. The potential for gold, I don’t want to mention numbers, but the potential is considerable. The whole story could end with some kind of mania in gold mining stocks.”
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