TGR: You said earlier that as an investor, you know which areas will do well. What are they?
ES: We have been seriously involved in precious metals for 10 years now. With some obvious ups and downs, it has been 10 great years. I had purchased gold and silver because I knew there would be more demand than supply, and I am sure that is the case today. I could not have predicted quantitative easing in 2009, nor could I have predicted that the financial world might actually buy into it. I still almost pinch myself when I think about it.
I always knew there would be a bonus thrown in by fiat currencies being damaged, and with quantitative easing you know that the values of currencies are going down. That makes the precious metals story just that much more compelling and I am sure that is why India bought 200 tons of IMF gold and others will follow suit. We are also seeing many hedge funds and pension funds moving into gold. Whereas central banks used to sell gold, now they are buying it. Then there are the ETFs. You can just feel the momentum in gold—it’s picking up dramatically.
TGR: With no interest in buying bonds given such low returns, and with so many currencies declining, is there really any upside in the market beyond precious metals?
ES: There is, but as one who runs hedge funds and has a short side in my portfolio, my biggest fear today is that we actually go into a hyperinflationary situation where all asset prices go up. Of course some will go up way more than others. Hard assets, including precious metals, would probably go up the most. Softer things such as bank shares probably would not perform as well. However, everything would go up in a hyperinflationary environment.