Still a Buying Opportunity for Gold

04/08/2011 9:20 am EST

Focus: COMMODITIES

Ed Finn

Editor and President, Barron's

The world's shiniest hedge could still have plenty of room to run, as the dollar and US policy give investors many fears to feed their investing decisions, says Ed Finn, editor and president of Barron's, in this exclusive interview with MoneyShow.com.

Gold had an amazing run in 2010. Did that surprise you?

Well, to some degree it did, but we think actually it’s a buying opportunity in gold right now.

Now?

Now, believe it or not. Some people in our roundtable think that gold could be up to $2,000, $3,000, $4,000, $5,000 over the next bunch of years.

And the reason is, they see the dollar losing value, and they see the Chinese currency gaining value and other developing-markets currencies gaining value, including Brazil—but you don’t want to pile all your assets into those countries. Gold is something that will retain its value if the dollar goes further down.

Won’t those central banks start selling into a rally in the price of gold? Particularly governments that are so stressed right now?

Well they have been selling quite a bit, and they may sell more, but we think the long-term direction for gold is upward. I wouldn’t pile all one’s money into it, but 5%—or if you’re really scared about the world economy, 10%.

It’s almost like an insurance policy, because if we go back into any situation like 2008 and we have a calamity, you’re going to see gold go up. And if we don’t, maybe gold goes down a bit, but the rest of your portfolio does well. So I look at it as insurance.

What would change your mind from such a bullish outlook for gold?

If the US Congress and the president could get together and cut spending.

Okay, so we know that won’t happen.

Well, I think you might see more than you might expect. I agree I’m a pessimist. I keep a little gold.

But I’ve heard more serious talk about the budget in the last year than I have before, and I sense a willingness in the White House’s part to look at it anew, so we might see that. If we see that, it’s bad for gold but it’s good for the country.

Are we going to see real cuts in Medicare, Social Security, and defense, or are we going to just chip away at some of the social programs?

That’s the big question for 2011. I think we will see some cuts but not as much as we need to restore our country to fiscal health.

[Jim Rogers is also a fierce gold bull, as he said in his presentation at The World MoneyShow Shanghai this week. Senior Editor Tom Aspray recently wrote about two gold miners and other gold plays to buy now. And Michael Johnston looked at the top double-leveraged gold ETF on the market today—Editor.]

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