goldsilverworlds.com / By Gold Silver Worlds / January 22, 2013
Talking about fundamentally important news, the following event deserves a primary place in the recent gold market evolutions. Bloomberg reports that The Pacific Group Ltd., a Hong Kong based hedge-fund is converting one-third of its assets into PHYSICAL gold. We have emphasized the word “physical” for a reason. It is not usual for a hedge fund to go outside the paper based trading business. More importantly, the fact that the investment company takes delivery of the metal ($35 million worth of gold bars) shows a growing distrust vis-à-vis paper investments and the exponentially expanding “funny money” base.
William Kaye, founder and chief investment officer of the company told Bloomberg the following:
“Gold, the way we look at it is anywhere from being undervalued to being seriously undervalued. We’re in the early stages, in our judgment, of what would likely be the world’s largest short squeeze in any instrument.”
He went on to say: “Central banks have so far been able to manipulate interest rates to allow governments to service their debt at low costs, averting market seizures. Still, the next big rally in precious-metal prices may be 18 months to two years away, triggered by a “financial catastrophe.”
Indeed, negative real interest rates in major economies of the world are the result of central bank intervention. The latest figures confirm this as published earlier today by Greshams-Laws (data as of December 2012). Still, the financial world seems very slow in reacting to these conditions, as the bond bubble keeps on expanding.