A recent article at the Morning Money website proclaimed that George Soros is buying gold stocks! . And not just any gold stocks: he’s sunk $25 million into high-risk small-cap gold stocks. When an investor of Soros’ standing begins buying up shares in gold mines, people can’t help but stop and take notice. When he enters the high-risk market, something important is clearly going on.
Buying small quantities of gold has always been a favorite activity of the small investor. But what is motivating Soros’ new interest in gold? In a recent podcast interview with Eric Dye of Enterprise Radio Network, Philip Diehl, president of US Money Reserve, suggests some interesting reasons why investors like Soros would be taking gold very seriously indeed.
Diehl knows what he’s talking about. As the former Chief of Staff of the US Treasury and Director of the US Mint, he’s an expert in precious metals. As president of the US Money Reserve, Diehl heads a company that is one of the world’s largest distributors of legal-tender bullion gold, silver, and platinum coins. These coins are produced by the US Mint and backed by the full force of the United States economy. That makes them a much more secure investment than gold and silver bars issued by other companies, which may suffer from adulteration and counterfeit techniques that have become much more sophisticated in recent years.
According to prnewswire, Philip Diehl has some answers to the question about why investors like George Soros would be interested in the gold market. He gives several reasons for its rise over the past decade. First is the financial crisis of 2008. The crisis instilled fear into the stock market, driving investors to look to gold. Because gold is universally recognized as “wealth insurance,” it’s become the obvious safe choice. A second cause for the rise in the gold market is the speculation and uncertainty about the direction of the Federal Reserve’s monetary policy. And then there’s the strong recent rise in the value of the dollar, which Diehl figures has reached its peak and is soon going to fall. When the dollar falls, gold becomes cheaper for international buyers. Central banks will try to increase their holdings in gold. Geopolitical uncertainty plays a role as well, driving international clients to rush to the security of precious metals.
If George Soros’ prediction of another looming 2008-style financial crisis is true.
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