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Buy Gold While Supplies Last, Says Fund Manager

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March 10, 2010 – Comments (2)

Definitely watch the accompanying interview with Frank Holmes. Continue watching all the way to the end where Holmes discuses Gold behavior in relation to negative real interest rates.

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Buy Gold While Supplies Last, Says Fund Manager
Posted Mar 09, 2010 09:35am EST by Peter Gorenstein


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[excerpt]

Frank Holmes, CEO and CIO of U.S. Global Investors, a long time gold bull sees no reason for this trend to end.

He tells Aaron in the accompanying clip, "there are many compelling factors both from a supply side and then from the demand side that looks like gold will trade higher."

Holmes' reasons to bullish on gold:

-- Massive federal deficits and low interest rates in the United States and elsewhere will raise inflation risks and keep downward pressure on currencies.

-- Rising incomes in Asia, where affinity for gold runs deep, will have a sizable positive impact on demand; Holmes tells Aaron that China is now the largest producer of gold in the world but that won't drive down prices because the government is "using it as a reserve currency for themselves." However, bulls should note China's chief for exchange official said this morning they would limit their purchases.

-- Peak Gold? Gold production from mines is not adequate to meet demand. Production is dropping around the world. Holmes notes worldwide production ell 10% in 2008 and is especially dramatic in South Africa - the world's largest producer.

Holmes, however, does have a few words of caution for those looking to get rich on gold. He only recommends a 10% allocation in gold that would be divided evenly between bullion and stocks. Among his favorite gold stocks is Randgold Resources Limited, a stock he owns and has recommended here in the past for its strong management.

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2 Comments – Post Your Own

#1) On March 10, 2010 at 8:34 PM, Tastylunch (29.29) wrote:

Bull comment of the day

#15

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=351759&t=01004034443672390362

"I've been using this site since around March of last year. dwot, you have dogmatically said the same thing since then. 'This rally is phoney-baloney.'  You and all the other "top fool" doomsayers...

You missed out out on the greatest rally of our lifetime and continue to do so. I agree, I think rentals are a better focus for you."

LOL I love it!

Some day people are going to have to explain to me why permaBulls are always so hostile to bears.

probably because no one likes a killjoy. even when they are right

 

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#2) On March 10, 2010 at 8:53 PM, binve (< 20) wrote:

LOL! THAT WAS AWESOME!!!

"I have been around the block you know! I've been here a whole year man! There's no bear market jive talkin turkey! When you have a year's experience in a near vertical market with no pullbacks, it really toughens a man, and you understand what investing is all about." .... LOL!!!!

You just made my day Tasty, thanks :).

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