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Legendary Investors Strongly Support Gold and Expect a Significant Price Increase

Famous investors, among the most prominent are James Rickards and Michael Burry, are extremely favorable towards investing in gold. Michael Burry, who became a legend almost on par with Warren Buffett after the movie “The Big Short” (where he was portrayed by Christian Bale), recently “ditched” tech giants Alphabet and Amazon from his portfolio and made a strong investment in gold. Burry was one of the few hedge fund managers who predicted the 2008 housing crisis, “betting” against the tide and the mortgage market, and made a huge profit from that move. Since then, his portfolio has been closely followed by the public.


As reported by Yahoo!Finance, Burry’s company Scion Asset Management made several significant changes to its portfolio in the first quarter of 2024. The key change was selling shares of Amazon and Alphabet, increasing investments in Chinese companies and Alibaba, and making a large investment in the precious metals sector.


Famous investor Michael Burry


“Burry also made a substantial bet on gold by purchasing 440,729 shares of Sprott Physical Gold Trust (PHYS), valued at $7.6 million at the end of Q1, making it the fifth-largest position in his portfolio. The closed-end fund’s official website says it holds “substantially all of its assets in physical gold bullion.” A unique feature of the Sprott Physical Gold Trust is that investors have the right to redeem their units for physical metals on a monthly basis, provided they meet the minimum redemption amount. This requirement is quite substantial, as “a unitholder must have enough units to equate to one full-sized London Good Delivery bar (approximately 400 oz)”, according to the article.


High earnings from gold prices


It seems that Burry has once again successfully predicted market movements. Namely, the price of investment gold increased from $2,062 per ounce at the beginning of the year to about $2,343 per ounce at the end of May, which is a rise of about 14 percent. To put this extraordinary growth in perspective, it is good to know that it significantly surpasses the leading stock index S&P500, which rose 11.7% in the same period.


Gold bar 400 ounces


Investment guru James Rickards has even higher expectations for the rise in gold prices. As reported by Yahoo!Finance, Rickards expects an ounce of gold to reach $27,553 in the future! This would mean a tenfold increase in price, and the investor offered an interesting argument for his estimate.


“My latest forecast is that gold may actually exceed $27,000. I don’t say that to get attention or to shock people. It’s not a guess; it’s the result of rigorous analysis”, Rickards wrote on his blog.


New gold standard


Rickards explained how in a system where fiat currencies (euros or dollars) can be freely exchanged for gold at a fixed price, a high gold price leads investors to sell gold for currencies, while a low price leads them to buy gold.


He pointed out that the “money supply” in the US amounts to $17.9 trillion and that maintaining confidence in the stability of the currency would require 40% coverage in gold. This was, in fact, a legal requirement for the Federal Reserve from 1913 to 1946. In other words, the US would need to hold a portfolio worth $7.2 trillion, and it currently possesses 8,133 tons of gold reserves.



The final step in Rickards’ calculation is relatively simple. He applied the value of $7.2 trillion to the mass of 8,133 tons of gold and came to the calculation that gold should be worth $27,553 per ounce. This would be an enormous 1,000% increase from today’s value, but it should be noted that it would not be the first time that the value of gold (almost) tenfolded in a short period. At the beginning of the millennium, in 2001, gold was worth about $270 per ounce, while this year its value exceeded $2,400 per ounce.

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