Soros vs Paulson: who’s right on their gold bet?

Michael Purves: “Gold is in a very long term, what I believe to be, multi-decade rally as the fundamentals of paper currencies—whether it’s the U.S. dollar, yen or euro—are steadily debasing,” he says. “The gold trade is far beyond quantitative easing and is far beyond just a short term hedge fund type play.”

Two camps are emerging in the gold market. On the one hand you have bearish billionaire investor George Soros, who sold 99 percent his holdings in the SPDR Gold Trust, all 5 million shares in the iShares Gold Trust and decreased his stake in NovaGold Resources Inc. and Kinross Gold Corp.

Bullish hedge-fund manager John Paulson, on the other hand, upped his holdings of Barrick Gold Corp. and Gold Fields Ltd, while maintaining his stake in the SPDR Gold Trust.

Michael Purves

“Gold is in a very long term, what I believe to be, multi-decade rally as the fundamentals of paper currencies—whether it’s the U.S. dollar, yen or euro—are steadily debasing,” he says. “The gold trade is far beyond quantitative easing and is far beyond just a short term hedge fund type play.”

While retail investors have been offered easy access to the gold market through ETFs, they’re not the only ones contributing to the bull run.

“The real players in the gold trade are the central banks…last year central banks bought $25 billion dollars US of gold,” he says. “I would expect those levels of gold purchasing to only increase in the coming years, as emerging market central banks are seeking to enhance their gold holdings.”

, Chief Global Strategist and Head of Derivatives Research at BGC Research, tells BNN that even with Soros exit, the bullish case for gold remains strong.

BNN.ca staff
1:30 PM, E.T. | May 20, 2011 Best of BNN