Since the economic downturn brought about by the Wuhan virus pandemic, investors have been buying large amounts of gold. However, European hedge-fund manager Crispin Odey believes that governments might attempt to derail gold ownership. Odey has built a reputation for his pessimistic outlooks on the market over the years.
“It is no surprise that people are buying gold. But the authorities may attempt at some point to demonetize gold, making it illegal to own as a private individual,” Bloomberg referred to some of Odey’s remarks in a letter to investors. “They will only do this if they feel the need to create a stable unit of account for world trade.”
Anna Golubova of Kitco News noted that “because currencies are no longer tied directly to gold, there have been no reports or indications out there that governments or central banks are looking into such a move.”
Last month, Odey European Inc. fund increased its gold holdings, with June Comex gold futures making up 39.9 percent of the fund’s net asset value towards the end of April.
Odey’s fund increased by 21% in March and then fell by 9.5% in April, according to a Bloomberg report.
Odey has compared the Wuhan virus crisis to the Great Depression of the 1930s. He believes that central banks would fail to contain the rise of inflation.
“History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage,” Odey stated. “I very much expect that the authorities will fight these prevailing trends for every inch of the way, but I also expect them to lose the fight.”
Many research firms and banks believe that gold prices will reach new record highs as economies begin to reopen and inflation rises. They predict that gold prices will rise at the end of 2020 or the start of 2021.