My Blog
Eveillard - This Is All A Delusion, I Am Keeping My Gold
With global stock markets trading higher, today King World News interviewed legendary value investor Jean Marie Eveillard, who oversees $50 billion at First Eagle Funds. Eveillard told KWN that despite “the fact that the stimulus has been completely unprecedented in scope ... the economic recovery seems to be sputtering.” He also discussed the gold market, but first, here is what Eveillard had to say about the ongoing crisis: “There is no doubt that there are major deflationary forces at play. There is also no doubt that the private sector is continuing to deleverage. But in order to prevent the deleveraging of the private sector from sending the economy into a replay of the Great Depression, governments are leveraging themselves.”
Jean-Marie Eveillard continues:
“So the public sector is leveraging up in a major way in practically every country. And in a pure paper money system, which we’ve had for more than 40 years, in a pure paper money system you can always inflate. There are deflationary forces at work, but governments are making sure they are offset, if not more than offset, by leveraging up of the public sector. So I wouldn’t worry too much about deflation.
In any case, one could argue that deflation and inflation are two faces of the same coin. You know it’s one thing to stabilize matters in the short-term, but in the process you don’t want to compromise the medium and the long-term, which is what they did. Because now they are running into those Neo-Keynesian steps not helping much, in spite of the fact that the stimulus has been completely unprecedented in scope.
This has been true particularly in the US in terms of increasing the size of the Federal Reserve balance sheet....
Continue reading the Jean-Marie Eveillard interview below...
Advertisement
To hear which company $10 billion Sprott Asset Management and Sun Valley Gold
are the largest shareholders of and why click on the logo:
“In terms of the enormous budget deficits, and, accordingly, the galloping federal government debt. In spite of being unprecedented in size, the biggest stimulus since the Fed was created in 1913, and certainly the biggest fiscal stimulus ever in the history of the country, in spite of that, the economic recovery seems to be sputtering.
So the international monetary system, the weaknesses are apparent. People say, ‘Yes, but they have printed money, but look, there is no inflation to speak of.’ My point is there has been inflation. The Consumer Price Index, it’s not inflation, it’s just a symptom of inflation. Inflation is the excessive creation of money and credit. That certainly has happened.
Number two, in 1980 the Consumer Price Index was changed. Some people are smart enough to compute the Consumer Price Index as if there had been no change in 1980. They say, ‘Bernanke says it’s increasing 1.5% - 2% per year. But if no change had been made in 1980, the CPI is increasing not 1% or 2% per year, but 5%, 6% or 7% per year.’ So in a way this is all a delusion.”
Eveillard had this to say regarding gold: “We are only a little bit more than 15% off the all-time high. I think what has been working against the price of gold is you have countries such as India, where the currency has weakened considerably, and Indians are traditional buyers of gold. All of the sudden, the price of gold, in rupees, has increased quite a bit.
You may have small countries like Portugal or Spain, because they are in trouble, may be liquidating some of their gold. My point is, I look at gold as a substitute currency, and I continue to see that central banks throughout the world are printing money. As long as that goes on, I don’t want to lose my position in gold.”
The written portion above is just a small part of the tremendous interview with Jean-Marie Eveillard. The KWN interview with Eveillard is available now and you can listen to it by CLICKING HERE.
The interviews with Don Coxe and Ben Davies are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include Nigel Farage, James Turk, John Mauldin, Egon von Greyerz and Gerald Celente by CLICKING HERE.
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
June 27, 2012
