DOUG KASS: This Is A Great Time To Buy Gold

doug kass

Gold futures are well off their 52-week high of $1,804 per ounce. They are currently at about $1,394.50 per ounce. 

Hedge fund manager Doug Kass thinks it’s a great time to buy gold.  

“There is probably no better time to consider diversifying one’s portfolio into a depressed asset class (e.g., gold) than when the crowd is optimistic about a vigorous and self-sustaining global economic recovery and when the world’s stock markets are at record high prices,” writes Kass in a  Real Money column (via The Street).

Gold is currently his “largest long.

Here’s his argument:

  • Expectations for the price of gold are low and has “contrarian appeal.”
  •  “Last month’s gold selloff looks like a selling price and volume climax.” The price collapse in mid-April saw an “8 standard deviation event, which occurs statistically about every billion years.”
  • Shorts on gold have grown and there is potential for short squeeze and demand from short sellers.  
  • Global economic growth recovery projections are too optimistic.  
  • U.S. dollar strength may start to fade and currencies of “all major countries” are like to weaken.  
  • Inflation “seems inevitable” and this should prop up gold prices.
  • There are still tail risks out there. “I view an upcoming “aha moment,” in which it becomes recognised that easing is losing its impact as the Fed is pushing on a string. Again, QE might be with us for a lot longer than many anticipate.”
  • Demand for physical gold is rising.

Kass bought bought SPDR Gold Trust in pre-market trading last week.

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