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The “Bond King”: Buy Gold, Not Bonds

George Washington's picture




 

The "Bond King" - Pimco boss Bill Gross - says:

[There's] a diminished or dying cult of both bonds and stocks from the standpoint of a belief that they can return 10% ....

Gold can't be reproduced. It could certainly be taken out of the ground in an increasing rate but there's a limiting amount of gold.

And there has been an unlimited amount of paper money over the past 20 to 30 years and now - in this period of central bank expansion where it's QE1 or QE2, or whether it's the LTROs of the ECB or this potential new program ... then central banks are at their leisure to basically print money.

Gold is a fixed commodity that has a considerable store of value that paper money has not....

When a central bank starts writing checks and printing money in the trillions of dollars, it's best to have something tangible that can't be reproduced, such as gold.

***

Gold ... is a better investment than a bond or a stock, which probably will only return a 3 to 4 percent return over the next 5 to 10 years.

Gross doesn't believe that gold is a crowded trade at this point.

Has Mr. Gross been reading Zero Hedge?

Here's background for newbies to Zero Hedge.

 

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Mon, 09/10/2012 - 22:21 | 2780580 Diesel Seven
Diesel Seven's picture

I thought this site was for informed and knowledgeable members. Why are so many posters dogging Bill Gross? Saying he missed "the whole bond" rally is not true-- he heavily underperformed AGG the first half of last year, but made amends for it since; it was impressive how they were able to rebound. Moreover, so far he's been kicking ass while showing his hand managing a transparent actively-managed ETF (BOND). Look at the returns. (Not at my terminal, but really, look-up the returns, the guy deserves some credit). Lastly, he is managing a BOND FUND--if asset managers wanted a go-anywhere fund, they would look to a global macro hedge fund or one of the few go-anywhere open-end fund (e.g. Jeff Gundlach's DMLIX). My point, just because a fixed income guy is an advocate for real assets (gold) doesn't make him a schmuck.

Mon, 09/10/2012 - 21:37 | 2780504 Zer0head
Zer0head's picture

George you dumb shit

 

Pimpco and Gross are scum sucking NWO hacks

 

How much gold is in any of this emeffers funds -- answer

 

ZIP he speaks with forked tongue

 

(caveat - it's easy to talk gold when the prospectus exludes same)

 

Why oh why do you and Zero suck up to these scumbags?? 

 

now delete this post cowards

 

 

Mon, 09/10/2012 - 19:43 | 2780253 Debeachesand Je...
Debeachesand Jerseyshores's picture

The one thing certain in my mind is too purchase all the PM's you can afford to buy.

 

With Uncle Ben,the Super Mario Bros and China turning the forests in the Amazon into paper money,your holdings in PM's will explosive in valve like nothing the World has seen before.

 

Mon, 09/10/2012 - 14:29 | 2779249 BrettFavre
BrettFavre's picture

this is the same guy who missed the entire bond rally - pathetic but hilarious (especially after his botched botox job)

Mon, 09/10/2012 - 19:41 | 2780244 Buck Johnson
Buck Johnson's picture

He sure has and I bet he sees the writing on the wall about this economy.

Mon, 09/10/2012 - 13:25 | 2778955 lasvegaspersona
lasvegaspersona's picture

ZH is hardly the only source for advocacy of gold. Indeed ZH has its own but hardly unique view on gold. There are other (better in my opinion) ways of viewing gold and its importance in the coming, inevitable  changes of the monetary system. Fofoa's view and his lengthy consideration of the merits and uses of gold are the best I have found. Many gold advocates would give the government the control of the price of gold which defeats the purpose of gold if you ask me. Anyway the idea of acquiring physical, in your possession, readily available gold bullion is the best and almost only sensible financial advice that can be given as we approach the breakdown of the dollar global system and the reset which must follow. My advise is save in gold.

Mon, 09/10/2012 - 18:18 | 2780017 Clint Liquor
Clint Liquor's picture

"Many gold advocates would give the government the control of the price of gold which defeats the purpose of gold if you ask me."  lasvegaspersona

Amen, Brother! All I want the Government to do is make Gold and Silver Coins exchangable in any Bank at the current spot price, without fees or taxes. Let the people freely trade and save with PMs and we will see the true 'value' of FRNs.

Mon, 09/10/2012 - 14:05 | 2779164 ArrestBobRubin
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Correct. But in fact, way too often ZH has been mealy-mouthed about the rigging and manipulation of the PM "markets" and the issues and players around it. I know many others share this opinion as well.

Now that Gross, Paulson, Soros and a dozen other heavyweights are voting with their feet on Gold, now that the fact of rigging and manipulation is being accepted by ever greater segments of the investing community,  I find that ZH is using the cover to become much more forthcoming in their coverage and analysis.

While I'm happy about the new-found clarity and honesty, I disdain the fact that ZH has tried to play the middle of the road on this critical space over the past few years. Frankly, it feels more than a bit smarmy and sneaky.  I would have liked it better if they'd come clean on their own, rather than having been smoked out of their previous stance which now grows less tenable by the day.

I love ZH, but this is and has been my biggest knock on the Tylers. Hopefully this less than stellar chapter of their history will soon be in the past.

Mon, 09/10/2012 - 12:33 | 2778760 muppet_master
muppet_master's picture

bill gross = ANOTHER SHOE SHINE BOY

2002 when djia @ 7k..he said: "going to 5k" = me panic cover shorts

2009 when djia @ 7k, he said: "going to 5k" = me panic cover shorts

NOW gold @ 1730 (last week @ 1740) he says buy gold = me short GLD

 

Mon, 09/10/2012 - 16:39 | 2779082 ArrestBobRubin
ArrestBobRubin's picture

The reason to short GLD isn't because of the trajectory of gold's price.

The reason to short GLD is because it doesn't have the gold it says it has.  This is becoming widespread knowledge. The smart money will bail and move into CEF and PHYS before everyone knows and GLD's price crashes.

The banksters at HSBC are the "custodian" (crooks) for GLD. The same story of not having the metal they say they have is true of SLV: the crooks at JPM are the custodians for it. Are these entities trustworthy, or the worst sort of global financial criminals? Take a look at the prospectuses for these scam "investment vehicles": they have more holes than Swiss Cheese. This fact is well known and documented.

The really smart money will not only bail out of GLD and SLV ahead of the crowd, it will also short the crap out of both.

For PM ETFs, CEF, PHYS, and PSLV are the choice of those who've done their due diligence and refuse to be chumps for, and accessories to, bankster theft.

Mon, 09/10/2012 - 09:56 | 2778171 Bartanist
Bartanist's picture

And this is how currencies (and countries) DIE! Slowly but surely the confidence destruction accelerates.

Why should we have any confidence in the currency? It is clearly not worth anything because the Fed and its owner banks just create as much as they want with absolutely no control or self restraint. If the banks and Fed cannot establish some limit on the quantity of dollars produced then the ultimate value is ZERO.

Oh, but wait ... maybe that is their intention. They will buy as many assets as they can with dollars that won't exist in a few years so that they own the real value and wealth and they will leave all of the people and countries they paid the dollars to holding worthless paper.

The banks and Fed must know that they are destroying their power base and their best hope is to claim ownership of everything when the dollar is destroyed. However, wouldn't paying something (dollars) for something of value (land or gold) and while intentionally destroying the first something (dollars) be an act of FRAUD. IMO, yes and if they buy things with their dollars and then destroy the dollar, they should all be prosecuted to the full extent of the law, including possibly for treason ... but then again the Obama administration has prosecuted ZERO financial criminals... so it will most likely be left to the people to extract what they believe to be justice. (... and that is the problem with a captured government. They will not even provide the illusion of justice.)

Mon, 09/10/2012 - 08:58 | 2778008 Pool Shark
Pool Shark's picture

 

 

Hey George:

Last week called; they want their story back

http://wallstreetpit.com/96380-double-digit-returns-from-stocksbonds-are-over-pimcos-gross/

 [Where ya been?]

 

Mon, 09/10/2012 - 08:50 | 2777987 El Oregonian
El Oregonian's picture

"Gold NEVER grows old, baby..."

Mon, 09/10/2012 - 10:14 | 2778213 Bartanist
Bartanist's picture

... and the value of gold has NEVER gone down relative to other assets, right?

Mon, 09/10/2012 - 08:48 | 2777984 new game
new game's picture

money will ALWAYS chases the best return;  hmmmmm

got gold? how bout silver, hmmm

G and A? as insurance....

Mon, 09/10/2012 - 08:45 | 2777972 Broker NotBroke
Broker NotBroke's picture

Double post

Mon, 09/10/2012 - 08:44 | 2777970 Broker NotBroke
Broker NotBroke's picture

You guys haven't looked at the path finder funds have you? Check out their number one holding. Bill bought the global discovery team, now he's giving them a boostie.

Mon, 09/10/2012 - 08:33 | 2777948 midtowng
midtowng's picture

Gross is famous for saying one thing and doing another. I think he has to since his fund is so large it moves markets.

However, in this case I believe him.

Mon, 09/10/2012 - 07:53 | 2777875 CheapBastard
CheapBastard's picture

Bond Bubble is deflating. As interest rates regress to the mean (higher), bonds will decrease in value. Add that to the losses you take due to the real inflation rate of about 5-6%.

Mon, 09/10/2012 - 08:42 | 2777967 ATM
ATM's picture

That will not happen for quite a while. Do not discount the power of money printing to first lower rates, then , eventually, rates will simply rise no matter what they print. 

 

We arent close to that yet but it gives you time to put your plan in place.

Mon, 09/10/2012 - 07:29 | 2777855 Upland27
Upland27's picture

Supposedly he used to own a lot, but lost it in a boating accident in the middle of lake erie.

 

Gold, Biatches

Mon, 09/10/2012 - 07:11 | 2777842 Central Wanker
Central Wanker's picture

Maybe Gross has, in due time, an announcement to make.

Such as "We've acquired a 10% gold insurance for our bond portfolio"

(That's what everyone should have...)

Mon, 09/10/2012 - 06:02 | 2777809 ClassicCommodity
ClassicCommodity's picture

This is fucking crazy!!

Mon, 09/10/2012 - 07:54 | 2777876 boogerbently
boogerbently's picture

Wouldn't Gross FIRE any Pimco employee for pimping gold over bonds?

Mon, 09/10/2012 - 02:01 | 2777681 Cult of Criminality
Cult of Criminality's picture

Giving a few to Mr Ron Paul, to hold up to the chairsatan and his `Ilk`

Mon, 09/10/2012 - 01:47 | 2777666 diogeneslaertius
diogeneslaertius's picture

all other asset classes pale by comparison, even pimpco has to admit it now

and yet the propaganda will propagate, fiat Stockholm syndrome is a helluva rug - hilarious watching him verbally dance around the core phenom and ultimately say everything, from "you cant print metals" to "HERP ZNIRP" XD

Mon, 09/10/2012 - 01:40 | 2777662 DavidPierre
DavidPierre's picture

Has Bill Gross lost his mind?

 Bill Gross says that Gold, of all things is a better investment than bonds or stocks. Here is the guy who manages something like $1 trillion and thinks that GOLD is better than stocks or bonds?

 

What if he decides to start to buy some Gold as a hedge?  PIMCO of course has a commodities fund which has recently upped it's stake in Gold but what about the huge flagship funds?  He said that, long term, stocks and bonds will not return much...so maybe he'll want to sprinkle a little bit of Gold dust around the portfolios to tweak his returns?

Well, maybe not because of the prospectus but it's certainly a humorous thought!

Last month we found out that George Soros and John Paulson have exited their financials and built up their Gold positions.  Now this news from Bill Gross... Gold UP $34...what's up with this? Isn't it a non farm payroll reporting day? Doesn't Gold and Silver get smashed 99% of the time before and during these reports no matter what they report?

What the heck happened?

Turned the corner, that's what's happened.  One full year with the "official foot" on the throats of Gold and Silver and as illustrated by the Bill Gross interview, people are finally figuring it out.  The "correction" that was so carefully orchestrated did nothing other than irritate sentiment and get investors, some very big investors to start scratching their heads as to why the metals acted the way they did. Do not expect the Bill Gross's of the world to come out now and say...

"Gold and Silver are artificially low because their prices have been suppressed".  They will at some point and are beginning to act...vote...with their capital.

Everything that Bill Gross said is correct and nothing he said is anything that you haven't heard before like a broken record.  What he said is at most, basic, solidly grounded and pure common sense and logic.

Five years ago, what he said would not have been acceptable nor would it have been carried by Bloomberg. He would have been ridiculed, laughed at and possibly even blackballed by the financial media.  He did not put a number out there when he was asked at the end. Maybe he didn't want to get pinned down, maybe he didn't want to sound like one of us "lunatics" or...maybe he has done ALL of the logic and understands that you CANNOT put a number on Gold because it is a finite resource that will be chased by unlimited paper!

In any case, this is big, VERY BIG, when the biggest money manager in the world speaks the truth and tells us exactly the conclusion that we've already come to.  Is Gold up today because of Bill Gross?  Maybe, maybe not, but there is certainly no selling based on his comments.  We are now getting close to the point where it will be "cool" to be bullish on the metals.  Just on his own, Bill Gross, because he is so mainstream and widely accepted, has made it at least "OK" to be bullish.  Not "in the closet" bullish.  PUBLICLY bullish!

We are not done yet for the day and there is still time for the cabal to make an attempt to put Gold back in its 2% box. How about a 3 - 3 1/2 % day here and stuff the shorts?  Whether it is now, next week or next month, it is coming.   Go back to last Friday and remember the same upwards action going into a weekend!? Someone really wants in...over the weekend...remember...WEEKEND?  The "Reset" will be over a weekend!  This by the way is happening while the Dollar is weakening versus other paper currencies. The upside momentum was waning for the Dollar.  It has finally rolled over and is now beginning to see liquidation. 30-60 days from now could be a very DIFFERENT landscape altogether. A waterfall move by the Dollar would not be surprising at all and of course, a moonshot move by the metals would go hand in hand should this occur.

A weakening Dollar is no longer necessary for higher metals prices as ALL paper currencies have the same problem and investors of all nationalities are faced with the same problems as are owners of Dollars.

Welcome Bill Gross! You haven't lost your mind! 

Hold on to your hats and ounces folks!

www.lemetropolecafe.com

Mon, 09/10/2012 - 17:48 | 2779930 billsykes
billsykes's picture

It is refreshing that a guy of his stature and standing within the "establishment" would even mention the word gold.

Mon, 09/10/2012 - 09:48 | 2778143 i-dog
i-dog's picture

Very impressive, "David Pierre"! ... spotting the new post, reading GW's post, listening to Gross and then typing a 740 word reply ... all in less than 5 minutes! That's a typing rate of over 150 words/minute ... faster than a speeding bullet....

Does anyone else smell fish around here?....

Mon, 09/10/2012 - 13:30 | 2778983 ArrestBobRubin
ArrestBobRubin's picture

Well Shelock, all he did was to copy and paste the piece from Bill Murphy's LeMetropole Cafe site. It was there last week, I read it myself.

How long does it take you to copy and paste?

Smell the coffee, not a fish.

 

Mon, 09/10/2012 - 18:30 | 2780053 Bastiat
Bastiat's picture

That works.

Mon, 09/10/2012 - 14:10 | 2779181 DavidPierre
DavidPierre's picture

Smells like Fish...

Tastes like Chicken!

 

Mon, 09/10/2012 - 12:20 | 2778713 forwardho
forwardho's picture

Time stamps and space time reality are a  bitch eh... good catch i dog!

Mon, 09/10/2012 - 12:56 | 2778842 Bastiat
Bastiat's picture

An explanation is in order.

Mon, 09/10/2012 - 07:26 | 2777853 Bicycle Repairman
Bicycle Repairman's picture

Isn't Gross the guy that is always talking his book?

Mon, 09/10/2012 - 01:48 | 2777667 diogeneslaertius
diogeneslaertius's picture

*throws silver rounds on stage*

Mon, 09/10/2012 - 02:00 | 2777678 Cult of Criminality
Cult of Criminality's picture

Thats me picking them up

Mon, 09/10/2012 - 17:49 | 2779922 DoChenRollingBearing
DoChenRollingBearing's picture

We are here in Italy on vacation.  Italians having been telling me for three days now that they are SELLING their gold (inc. heirlooms) just to pays bills...  The Italians are cutting back spending (personal and .gov), but not much.

I will have LOTS to comment (on my blog about Sept. 28 upon our return) on ZH's recent article on Italians selling their gold.  It's REALLY, REALLY bad over here.

But, that does NOT mean that this might wash up on US shores too (my guess, with debts and all).

GOLD, bitchez!  Really!  Protect yourselves...

Mon, 09/10/2012 - 18:38 | 2780073 DavidPierre
DavidPierre's picture

 

The BBC have a new TV series about hard up people selling their gold to give them some cash.

Selling their gold to give them some cash.

Much of it is a sort of "fly on the wall" documentary about people who are struggling financially and selling off their gold necklaces and rings. It brings home just how tough things are. Of more interest to investors in gold were interviews with the people who are buying the gold and their customers who are smelting it and for the most part turning it back into gold ingots. The trade is now large with one smelter from Birmingham (traditionally the centre of the gold jewellery trade in the UK) claiming that nearly one ton of mainly 9 ct gold was being reclaimed from scrap jewellery by it each week or around £20 million worth - ( 25 minutes into the video).

The smelter said that most of it was being turned into gold ingots which were in huge demand. Interestingly, they also quoted increased demand for gold from the electronics industry.

http://www.bbc.co.uk/iplayer/episode/b01fln4f/Cash_Britain_Episode_2/

The Telegraph recently reported a similar trend in Italy.

http://www.telegraph.co.uk/finance/financialcrisis/9487198/Debt-crisis-Italian-cash-for-gold-shops-quadruple-as-financial-crisis-deepens.html

Wonder just how strong the underlying demand for gold is now as I suspect that a lot of this trade is unreported around the world. It also demonstrates perfectly that gold acts as a currency on the streets, even in so-called advanced economies.

http://www.lemetropolecafe.com

Mon, 09/10/2012 - 18:42 | 2779984 obessoligarch
obessoligarch's picture

how desperatelly low they could sell?

Mon, 09/10/2012 - 17:51 | 2779940 billsykes
billsykes's picture

Are you getting any deals in Italy?

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