Make Kitco Your Homepage

Will private gold ownership be banned if inflation runs out of control? Odey thinks so

Kitco News

Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

(Kitco News) Investors have been on a gold-buying spree the past two months as they opt for safety amid these very uncertain times. But governments might try to knock gold down if inflation skyrockets, according to European hedge-fund manager Crispin Odey, who is known for his doomsday prognoses and bearish market outlook.  

“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 quoted Odey as saying 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.”

It is important to note 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 proceeded to boost its gold holdings, with June Comex gold futures accounting for 39.9% of the fund’s net asset value at the end of April. From the stock market side of things, Barrick Gold Corp’s shares accounted for the fund’s largest single long equity position.

Odey’s fund was up 21% in March and then declined 9.5% in April, Bloomberg reported, citing the letter to investors.

Odey has equated the COVID-19 crisis to the Great Depression of the 1930s, stating that central banks would fail to contain what would be a rapidly accelerating inflation.

“History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage,” Odey said. “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.”

The view that gold prices will hit new record highs as economies reopen and inflation surges is a popular one among market experts, with many research firms and banks penciling in the move for the end of this or beginning of next year. 

At the time of writing, June Comex gold futures were trading at $1,728.00, down 1.38% on the day, amid upbeat attitude in the marketplace. 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.