Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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,


© 2005-2019 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