$10,000 Gold - Shayne McGuire
Tuesday, November 2, 2010 at 01:47AM
Gold Prices in Gold
There are not too many pension fund managers that we are aware of that actually have gold and the associated mining stocks in their portfolios so this came as a pleasant surprise to come across one who is an advocate of gold. The question now is just how many more pension fund managers are starting to think the same way and if they do move in reasonable numbers into gold and silver then gold prices would be pushed ever higher. The thing that gets us is just why does it take them so long to recognize a good opportunity, after all gold prices have been heading north for ten years. How do they explain to their respective board of directors that they haven't actually bought any of the precious metals yet and why aren't those directors questioning their investment strategies.

Anyway here it is:

The price of gold could reach $10,000 per ounce, more than seven times its current price, according to Shayne McGuire, a pension fund manager.

McGuire, who manages a $330-million gold portfolio at the Teacher Retirement System of Texas, makes the outsize forecast in his newly-released book, "Hard Money.”

McGuire believes gold prices will skyrocket amid rising inflation, among other factors. He proposes that if other pension funds and large institutions start buying gold -- demand for the metal would overwhelm supply, even if only 1 percent of global fund assets were shifted to gold. "Now that the value of modern money is becoming highly questionable, more and more people are turning to gold. It's not the new thing; it's a return to normal," McGuire was quoted as saying.

Another gold bull, hedge fund kingpin John Paulson, has forecast gold climbing to $4,000 per ounce by early 2013.

According to the Wall Street Journal, in 2007, McGuire and a colleague persuaded the $100-billion Texas fund to invest in gold – making it one of the few major U.S. pension funds to have a fund solely devoted to the yellow metal.

The gold portfolio half of its assets invested in the SPDR Gold Trust (NYSE: GLD), a gold exchange-traded fund, and the remainder invested in gold equities.

However, Douglas A. McIntyre, writing in the financial blog 24/7 Wall St., scoffs at McGuire’s prediction.

“Gold’s recent price increase has been impressive, from under $800 in late 2008 to over $1,300 today,” he wrote.

“But, it is not likely to even double from current prices. Inflation, even if it reaches 10 percent, which is unlikely, would make gold one of a large number of hedges. And, investors would probably be wary about an investment in a commodity that has appreciated as much as gold.”

In addition, McIntyre pointed out, if the value in gold did indeed climb seven-fold from current prices (as McGuire forecasts), pension funds would want a hedge against, among other things, the value of the dollar, Federal Reserve actions that might cause inflation and inflation itself.

“Pension funds have a number of investments that they have already decided are attractive in the event that inflation begins to return,” McIntyre noted.

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