A Faltering Global Economy, Neo-Keynesians & $15,000 Gold

by kingworldnews.com  Jean-Marie Eveillard

Today legendary value investor Jean-Marie Eveillard told King World News, “There are people who have figured out that in view of the enormous amount of money printing, which has taken place over the past three or four years, a price of $15,000 an ounce for gold would not be absurd.”

Eveillard, who oversees $60 billion, also said, “I’m not sure they are right, because I have not studied how they came to that conclusion, but I think what is true is there has been gigantic money printing, which will of course help the price of gold.”

Here is what Eveillard had to say: “The global economy seems to be weakening. It’s weakening in the US, Europe, China, in Asia, and this is in spite of the stimulus. Asia is suffering because Japan continues to do poorly. Again, this weakness is apparent despite the fact that Neo-Keynesian policies are in place. There is enormous fiscal stimulus associated with gigantic budget deficits.”

 

“There is considerable monetary stimulus associated with the Fed and now the ECB, with the ECB deciding in an ‘unlimited way’ they would print money.  So this weakness is a puzzle for policymakers.  It’s a sign that the economies in the developed world are not responding to the Neo-Keynesian remedies.

First, the Keynesian policies are somewhat dubious, but number two, after a major financial crisis, it’s always very difficult for the economies to recover....

 

“In view of the fact that the Neo-Keynesian policies continue to be in place almost everywhere, and as long as there is no change in those policies, I think gold still has considerable upside.

There are people who have figured out that in view of the enormous amount of money printing which has taken place over the past three or four years, a price of $15,000 an ounce for gold would not be absurd. 

I’m not sure they are right, because I have not studied how they came to that conclusion, but I think what is true is there has been gigantic money printing, which will of course help the price of gold.

I would also add that I think the mining shares, of course it was impossible to determine the timing, but they had been lagging the price of bullion for so long, and in such a major way, that we knew at some point they had to outperform.  It’s quite possible that a week and a half ago we got to that point.

The move in the mining shares surprised some market observers because they thought they could pick the bottom.  Going forward, I think investors should own a proper balance of undervalued equities, gold, and cash.  Gold is appropriate today for the obvious reason we have discussed, but they should also own undervalued equities because to some extent they are also real assets.”