NEW YORK CITY, April 30 (WNM/Elliot Management Corporation) – In a letter to investors, Paul Singer, founder of hedge fund Elliot Associates, writes (https://www.docdroid.net/kfBxxVh/elliot-letter-april-162020-perspectives-paul-singer-elliott-pdf):
“This is a perfect environment for gold to take center stage. Fanatical debasement of money by all of the world’s central banks, super-low interest rates and gold mine operation and extraction issues (to a large extent related to the pandemic) should create a fertile ground for this most basic of all money and stores of value to reach its fair value, which we believe is literally multiples of its current price. In recent months, gold has gone up in price to some degree, but we think that it is one of the most undervalued investable assets existing today. There is nothing else that has its historical and fundamental characteristics, and we think that it is only beginning its inexorable, but impossible to time and place boundaries around, uptrend. The fact that it is so under-owned by institutional investors is astonishing to us in light of the obsessively inflationary policies being pursued by central banks around the world.
From the world Gold Council: “Gold is the only reserve asset that bears no political or credit risk, nor can it be devalued by the printing presses or extraordinary monetary policy measures. The yellow metal is insulated from income inequality, polarization of political parties, trade disputes, deteriorating government budgets, rapidly aging populations, massive growth in unfunded liabilities and counterparty risk.”
Emerging and developing economies hold only 5% of their total reserves in gold, compared to a 16% share held by the developed world. The share of gold in total global reserves has fallen from 13.5% to 10.6% over the last 20 years. Institutional investors around the world own basically zero gold.
Gold today, despite its modest run up in recent months, is the answer to the question: Is there an asset or asset class which is undervalued, underowned, would preserve its value in a severe inflation, and is not adversely affected by COVID-19 or the destruction of business value that is being caused by the virus?”