Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18
The Value of Bitcoin - 11th Jul 18
America a Nation Built on Lies - 11th Jul 18
China, Asia and Emerging Markets Could Result In Chaos - 11th Jul 18
Bullish Gold Markets in the Big Picture? - 11th Jul 18
A Public Bank for Los Angeles? City Council Puts It to the Voters - 11th Jul 18
Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - 11th Jul 18
Argentina Should Scrap the Peso and Dollarize - 11th Jul 18
Can the Stock Market Close Higher For a Record 10th Year in a Row? - 11th Jul 18
Why Life Insurance Is A Must In Financial Planning - 9th Jul 18
Crude Oil Possibly Setting Up For A Big Downside Move - 9th Jul 18
BREAKING: New Tech Just Unlocked A Trillion Barrels Of Oil - 9th Jul 18
How Trade Wars Penalize Asian Currencies - 9th Jul 18
Another Stock Market Drop Next Week? - 9th Jul 18
Are the Stock Market Bulls Starting to Run? - 9th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Former Lehman Brothers Trader: Unpredictable Government Actions Make It Smart to Hold Gold

Commodities / Gold and Silver 2017 Aug 11, 2017 - 12:35 PM GMT

By: HAA

Commodities

Shannara Johnson : What does a hot-shot Wall Street trader see in physical gold? And why would he be adamant about holding it?

Jared Dillian, former head of ETF Trading at Lehman Brothers, is an acclaimed financial author and investment strategist at Mauldin Economics. He first discovered gold in 2005 when the launch of the SPDR Gold Shares ETF (GLD) drew his attention to the yellow metal.


“It was a cool idea, this way to securitize gold,” Dillian said in a recent Metal Masters interview with the Hard Assets Alliance. “But I didn’t know anything about gold. And I’m like, ‘Who wants gold? Why would you want that?’”

Once he started looking into precious metals versus paper money, he quickly became bullish on gold: “An ounce of gold will buy you a nice suit today, it bought you a nice suit 20 years ago, it bought you a nice suit 200 years ago… Dollars have depreciated over time; pretty much any fiat currency has. So when I look at gold, I don’t look at it like, it’s going to go up and I’m going to get rich. It’s actually not a trade—it’s the furthest thing from a trade. It’s a way to maintain your purchasing power over time.”

The All-Weather Investment

Dillian, who grew up in a poor town in eastern Connecticut, was only 27 when he started working as a trader at Lehman Brothers. Three years later, he was running the ETF desk and trading a billion dollars per day on a regular basis.

Being used to the typical New England thrift, he admits that he didn’t fully understand that world until after he left it in 2008. “You know, I would bring in a can of beans for lunch, with a can opener, and open the can of beans, and bring a plastic fork and eat beans for, like, 49 cents.”

This attitude also informs Dillian’s stance on gold: “It’s hard to predict what governments are going to do, so it’s smart to hold some all the time. It’s really an all-weather investment.”

The Fed’s Playing It Fast and Loose

He believes we’re seeing signs that inflation is creeping up—asset inflation, that is, which the Fed deliberately ignores. “Central banks today say there is no inflation. There’s no inflation of toys or TVs or haircuts, but there is inflation of houses and Amazon stock and Treasury bonds, and lots of financial assets.”

The reason for this predicament, he says, is the Fed’s ultra-loose monetary policy, which has kept real interest rates at negative levels for a very long time. “I would call that irresponsible central banking, and we’re dealing with it today, still.”

There’s no sign, Dillian insists, that at least developed-world central banks are learning from the dire experiences of the recent past. “They’re actually kind of getting worse.”

Trading Gold vs. Investment Gold

He advises investors to own both “trading gold” like mining stocks and ETFs, and “investment gold” in the form of bullion that they just buy and hold: “10 to 15 percent is probably a pretty good guideline.”

Even if you’re bullish on gold, though, you shouldn’t get too exuberant, Dillian warns, because a price spike is almost always associated with a financial or political crisis. “Remember, gold is not a trade that’s ever going to make you happy… I hate to say it, but it’s a hedge, it’s an insurance policy. You just do it.”

Click here to watch the full interview with Jared Dillian for more insights about gold and the markets.

© 2017 Copyright Hard Assets Alliance - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable,


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules