Guru watch: Grant’s still buying gold

published 23 September 2011

Grant's Interest Rate Observer has become required reading among "cognoscenti who appreciate big doses of financial history served up with compelling investment ideas", says Leslie P Norton in Barron's. Among founder Jim Grant's "greatest calls" has been the gold bull market.

It's not over yet, says Grant. Gold "is simply the reciprocal of the world's faith in the institution of managed currencies. It is one divided by T, where T stands for trust. And trust is a shrinking number and will continue to shrink. Therefore I am still bullish."

The euro is set to fall apart as policymakers aren't strong enough to counteract the "centrifugal forces" at work. The dollar will then get a boost as "Europeans with money" seek a haven in America. Yet it's hardy an appealing currency overall. The Fed has managed to produce "symptoms of both inflation and deflation". The country's huge debt load pushes down activity and prices. But all the money printing and interest-rate reductions have lit a fire under commodities and risky assets and underpinned consumer price inflation of almost 4%. "What an interesting world we live in."