Never say never: billionaire investor Sam Zell has bought gold for the first time.
How does it feel?
“It feels very funny because I’ve spent my career talking about why would you want to own gold?” Zell said in a Bloomberg Television interview.
But what made him change his mind?
Inflation.
“Oh boy, we’re seeing it all over the place. You read about lumber prices, but we’re seeing it in all of our businesses,” he noted, echoing another famous tycoon and staunch gold critic Warren Buffett.
“When you see the debasement of the currency, you say, what am I going to hold on to? Obviously one of the natural reactions is to buy gold,” Zell stressed and went on to add that the current situation is “very reminiscent of the 1970s.”
What exactly happened in the 1970s?
The 1970s saw some of the highest rates of inflation in the United States' recent history, with interest rates rising to nearly 20%. Certain economists attribute this Great Inflation primarily to reckless monetary policies.
And what is happening today?
In March, the US consumer prices jumped 0.6% in what turned out to be the biggest monthly increase in almost 10 years.
With inflation accelerating due to multiple factors (extreme money-printing, strained supply chains, and soaring commodity prices etc.) we’re now seeing an increase in lumber futures prices by more than 500% since early April 2020.
But so far, the Fed keeps on saying inflation is “transitory” and has vowed to continue its ultra-low interest rate policy.
Is history repeating itself?
Sam Zell believes it could be.
