Billionaire investor John Paulson is boasting about gold as an inflation hedge, saying that it could jump in value if the Fed rate hikes fail to crush inflation. He believes that if that happens, investors will lose faith in the central bank, causing their long-term inflation expectations to rise and boosting the demand for gold. In other news, the World Gold Council says that despite the yellow metal’s losses, it is still outperforming other major assets. “…Gold has done much better than inflation-linked bonds, both in the U.S. and elsewhere. And we believe that gold’s performance so far this year reflects the behavior of its underlying drivers.”

Business Insider/Theron Mohamed
Billionaire investor John Paulson warns US house prices could tumble – and touts gold as an inflation hedge

John Paulson, who called the implosion of the mid-2000s housing bubble, warned US home prices could slump again, but ruled out the decline sparking another financial crisis.

“We’re not at risk of a collapse today in the financial system like we were before,” he told Bloomberg in a recent interview. “Housing may be a little frothy. So housing prices may come down or they may plateau, but not to the extent it happened.”

The billionaire investor and Paulson & Co founder explained that about 15 years ago, the mortgage market and banking system were much less solid than today.

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CNBC/Sam Meredith
Fed’s Evans says he’s getting a little nervous about going too far, too fast with rate hikes

Chicago Federal Reserve President Charles Evans says he’s feeling apprehensive about the U.S. central bank raising interest rates too quickly in its quest to tackle runaway inflation.

Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Evans said he remains “cautiously optimistic” that the U.S. economy can avoid a recession — provided there are no further external shocks.

His comments come shortly after a slew of top Fed officials said they would continue to prioritize the fight against inflation, which is currently running near its highest levels since the early 1980s.

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Kitco News/Neils Christensen
Despite its losses, the gold market continues to outperform most other major assets – WGC

The gold market continues to struggle in the face of unprecedented strength in the U.S. dollar; however, a new report from the World Gold Council said that investors need to put the recent price action in perspective compared to larger movements within financial markets.

Although the gold market has seen some significant selling pressure, dropping briefly to fresh two-year lows at $1,633 an ounce, prices are still only down less than 10% since the start of the year. In his latest report, Juan Carlos Artigas, global head of research at World Gold Council, said that given where the U.S. dollar is along with bond yields, gold prices should be down closer to 30%. December gold futures last traded at $1,646.90 an ounce, down 0.53% on the day.

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