Eveillard – All Hell May Break Loose & Gold is Way Undervalued
March 9, 2012
Today legendary value investor, Jean-Marie Eveillard told King World News all hell could break loose and gold is nowhere near fair value. Eveillard, who oversees $50 billion at First Eagle Funds, had this to say about the situation, “I think they bought some time, not so much because of what happened with the Greek bonds but because the head of the ECB decided to lend the commercial banks whatever they needed. This happened in December and again in February and it totaled over one trillion euros.”
When asked about the action in gold, Eveillard stated, “I was intrigued to see gold opened and traded down to $1,675 and then had a $40 reversal to the upside, hitting $1,715. I thought this was a very nice rebound. As far as the price of gold is concerned, I think we are far from what an appropriate price would be.
As I mentioned previously, the increase in the size of the balance sheets of the top five central banks in the world, over the past three years, amounts to the equivalent of 70% of the gold ever mined in the past 3,000 years. We are just talking about the increase over the past three years.
So I think we are very far away from the appropriate price. The bottom line here is nobody knows what the landscape in front of us will look like. There is a tremendous amount of uncertainty and in these type of conditions gold tends to thrive.
Meanwhile, the rest of the world is into the equity markets. It’s really equity markets by default because cash yields nothing and bond returns are puny.
So while the rest of the world focuses on the equity markets, very quietly, gold is outperforming stock markets and is yet again the best performing asset. This has been going on for 12 years and yet very few people are even interested or participating.”
Jean Marie Eveillard continues:
“As I said, this has bought the Europeans some time, maybe a few months. The Greek situation is really beyond repair, but everyone is afraid of contagion so they just keep kicking the can down the road.
If there turns out to be contagion and it touches the Portuguese, the Spaniards, the Italians and who knows, maybe even the French, then all hell would break loose….