Welcome to Capital Account. Gold hit an 11 month high today, supposedly bolstered by signs that the ECB will keep borrowing costs low and the notion that the central bank stands ready to buy bonds in the secondary market. As long as central banks continue to print and maintain negative real interest rates, should investors consider owning gold? A recent PIMCO report stated the following:
“We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio“. Could this mean investing in gold will become mainstream? We speak to GoldCore’s Mark O’Byrne about the impact of PIMCO’s report. We discuss both the supply side, as well as the demand side of the gold bull run. Are people using gold to hedge, not against moderate inflation, but against the potential for dislocating deflation or runaway inflation and hyperinflation?
Also last month a gold dealer in Manhattan discovered a certified gold bar was in fact made up of more than 75 percent Tungsten. Does fake gold really represent a tail risk for buying physical gold or is this a one-off thing? We discuss the role of gold and the potential for fraud.