Jason Farrell

Robert Wenzel over at Economic Policy Journal had an interesting post yesterday about comments made by Dr. Philippa “Pippa” Malmgren about the recent fizzling of spot gold.

Malmgren has an uncommonly strong political resume for someone who seems to hold rather contrarian opinions on metals, having been special assistant to the president for economic policy on the National Economic Council during the Bush administration and a member of the President’s Working Group on Financial Markets and the President’s Working Group on Corporate Governance. She was also Bush’s liaison to the SEC and other federal regulators.

Today, Malmgren, who has returned to the private sector and counts an enormous list of the world’s biggest banks, hedge funds and government entities among her clientele, believes now is the time to grab gold:

“Gold bulls have a rare chance to double up now. Gold bears will have a hard time doubling down from a record profit. Meanwhile, apparently the Indians and everybody else in the emerging markets recognizes a good deal when they see it. As inflation pain continues to make headlines from high tomato prices in Brazil to the same for onions in India, no emerging market investors have any illusions. Inflation for them is here for the duration. A gold-backed yuan is increasingly sounding like a sensible idea.”

She has a theory on the Chinese as well:

“They want the yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue. The recent bilateral currency deals with Australia, France, Russia, Singapore and many others reflect this desire to displace the USD as the world’s reserve currency.”

One wonders, given that she consults with the likes of Barclays, UBS Warburg, Deutsche, Bank of America and scores of others whether this is a common opinion within her circles.

The Daily Reckoning’s own Byron King has sounded off on this topic recently, noting that as the paper price for gold plummeted, “buyers everywhere walked into gold shops and souks and walked out with everything they could carry.” In case you missed it, you can read more of his analysis here.

Jason Farrell

For The Daily Reckoning

P.S. As the Big Money remains faithful to Apple and other blue chips, the “small guy” in places like India and China remains faithful to precious metals — gold in particular. That’s because gold is still highly coveted there as a reliable store of value, and when the “paper price” goes down, the people in these countries buy it hand over fist. But the story doesn’t end there…

Subscribers to The Daily Reckoning email were clued in to a unique opportunity to take advantage of this interesting story. If you didn’t receive a copy in your inbox, you can sign up for free, right here.

Jason Farrell

Jason M. Farrell is a writer based in Washington D.C. and Baltimore, MD. Before joining Agora Financial in 2012 he was a research fellow at the Center for Competitive Politics, where his work was cited by the New York Post, Albany Times Union and the New York State Senate. He has been published at United Liberty, The Federalist, The Daily Caller and LewRockwell.com among many other blogs and news sites.

Recent Articles

Addison Wiggin
A Short History of Speculative Excesses and Wealth Preservation

Addison Wiggin

For of all John Law’s faults, he at least understood that he who holds hard assets wins the day. Addison took the liberty of grafting supporting evidence together from his book with Bill Bonner, Financial Reckoning Day. Read on to see how originators of some of the worst ideas can give us some good ones too...


Greeks Turn to Gold on Bank Bail-in and Drachma Risks

Mark Obyrne

The Greek stock market is down 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case. Mark O’Byrne has the full story…


The Market’s An Emotional Wreck –Now What?

Greg Guenthner

Remember, the great commodity boom took more than a decade to play out. Prices skyrocketed across the board. But what goes up must eventually come down. Gold and silver lost their wings in 2013. Copper went into a death spiral late last year. And I don't have to tell you what's happened with oil over the past six months...