Best Investment Ever

Gold Bullion

One of  the world’s most successful hedge fund managers is John A. Paulson.   The billionaire Paulson,  is unhappy with his assets tied up in US dollars, the feeling now and has been for a few months is that gold is the best possible currency. Paulson announced last year that as of January 2010 is firm’s aim was to launch a dedicated gold fund. This fund will invest in gold stocks and gold derivatives in a bid to outperform the price of gold. $250 million of Paulson’s own money will be invested in this venture.

You might think that this adds up to a huge gamble but Paulson has a reputation and a track record for diligence and research. It’s impossible to ignore this move as he strives to make this happen.

During the rising house prices that saw unprecedented growth, Paulson bet the other way watching from the sidelines  and bet against the housing bubble. Whilst many of his customers make great profits, Paulson & Co still maintained his distance to the mass surge. Many thought that he was wrong.

Many investing gurus now agree with Paulson that gold will be the best investment in the world for the next two or three years.

In the last few months of 2009 gold sprinted in 30 days to a height of $1,218 from $1,050 and when you work the figures that is  a 16% gain. Between late October and early December gold made 14 record closes in just 17 days. Every year since 2001 gold has always gained and the run is far from over and some say it is just ” warming up”.

To find the best barometer for gold you just have to look at all the Fiat currencies. (see our currency or money page) the US dollar index comprises of British pounds, Canadian dollars, Japanese yen, euros, Swedish kronas, and Swiss francs. Gold’s high of 2008 has been easily surpassed compared to the basket of currencies. Two years ago 1 ounce of gold bought eight units of the US dollar index. Early 2008 saw a spike in which 1 ounce of gold bought 14 units, spiking recently at 16, but has dropped a little, back to 15 units. This upward trend will continue to do so for quite some time. Gold is rising against all major Fiat currencies.

It’s not just Hedge fund managers and billionaire investors that are buying gold, it’s all so governments around the world. In October 2009 India’s central bank purchased 200 tonnes of gold from the IMF this action has helped gold to reach its record heights. More countries are choosing to purchase physical gold than to rely on unbacked Fiat currencies.

We normally see the revaluation of gold and silver bullion in relation to the US dollar. Since 1980 gold has only risen 65% whilst inflation is up around 175% and stocks have gained an impressive 900%, so we can see there is a big adjustment still to come.

As more and more major investors pushed the price of gold upwards it begins to fall on the ears of smaller typical investors, as always in the market forces will see the price of gold spiral upward sharply and some analysts can see a doubling of today’s gold price if not far more.