Sam Zell Buys Gold with Inflation ‘Reminiscent of The ’70s’
The comments below are an edited and abridged synopsis of an article by Chicago Business
Billionaire investor Sam Zell sees inflation everywhere, and has bought gold as a hedge—something he says he used to knock others for doing.
“Obviously, one of the natural reactions is to buy gold,” said Zell. “It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”
Zell said he’s concerned not only about the US dollar but other countries printing money as well, and questioned whether inflation will be transitory, as Fed Chair Jerome Powell recently indicated.
“Oh boy, we’re seeing it all over the place,” Zell said of inflation. “You read about lumber prices, but we’re seeing it in all of our businesses. The obvious bottlenecks in the supply chain arena are pushing up prices. It’s very reminiscent of the ‘70s.”
While gold is an attractive investment, opportunities in fossil fuels are not, said Zell, who in 2019 agreed to set up a joint venture with Tom Barrack Jr.’s Colony Capital Inc. to invest in oil and gas.
“Right now, oil and gas are not priced to reflect the risk of what’s going on, whether it be in the EV world, a climate changed world,” he said. “As recently as a couple of years ago, I thought the risk-reward ratio was appropriate. It’s clearly become very inappropriate as our political situation has changed.”
In real estate, there are questions about what demand will look like over the next couple years in the office, lodging and retail sectors, Zell said.
Meanwhile, stores and malls are facing headaches, while hotels are more of a temporary problem.