James Grant: Gold Is ‘Very Timely Way to Invest in Monetary Disorder

by Frank McGuire

James Grant, editor of Grant’s Interest Rate Observer, is urging investors to buy gold because he fears the world will lose faith in central banks. He sees gold as a timely way to invest in monetary disorder.

James Grant: Gold Is ‘Very Timely Way to Invest in Monetary Disorder’While the stock market is at record highs and the bond market is acting as if this were the Great Depression, Grant urges investors: don’t be fooled. “The Fed is now hostage to Wall Street. If the stock market pulls back a few percent the Fed becomes frightened,” he explained.

He seems to have little confidence in Fed Chair Janet Yellen. “She believes what most interventionist minded economists believe: They have very little faith in the institution of markets and they don’t believe that the price mechanism is anything special. They want to normalize rates and yet they can always find an excuse for not doing so,” he said.

“We have been hearing for years now that the next time, the next quarter, the next fiscal year they will act. So I believe what I’m seeing: None of these days the Federal Funds Rate will go higher than 0.5%,” he said.

He said that for average investors, options are limited. “Sovereign debt is my nomination for the number one overvalued market around the world. You are earning nothing or less than nothing for the privilege of lending your money to a government that has pledged to depreciate the currency that you’re investing in,” he said.

Gold is one of this year’s most talked-about investment topics.

Investors tend to flock to gold in times of uncertainty because it is a safe haven that will hold its value. Gold demand hit record highs in the first half of this year. Until the global economy stabilizes, investors will continue to flock to the precious metal.

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