Could the government prohibit ownership of gold? If inflation skyrockets and the state loses control of the situation, this could be a reality, warns a hedge fund manager.
According to a letter to investors that was seen by Bloomberg, Crispin Odey, one of Europe’s highest-profile hedge fund managers, warns that the authorities could come for your yellow metal.
“It is no surprise that people are buying gold. But the authorities may attempt at some point to de-monetise gold, making it illegal to own as a private individual.
“They will only do this if they feel the need to create a stable unit of account for world trade.”
Considering that June gold futures represented 40% of the fund’s net asset value and Barrick Gold shares were his biggest long equity position, this may be just pumping up gold prices. But he still has a point because there is precedent. President Franklin Delano Roosevelt confiscated private gold holdings in 1933 in order to debase the U.S. dollar. And Odey pointed this out.
“History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage,” he wrote.
“I very much expect that the authorities will fight these prevailing trends for every inch of the way, but I also expect them to lose the fight.”
At the time of this writing, gold is trading at $1,751 per ounce.
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