An interesting interview with Rachele Benepe, co-manager of First Eagle Gold Fund ? in CNN Money today. A couple of questions and answers I thought some may find interesting ?As a gold fund manager, you can buy bullion or you can buy gold mining stocks. How do you decide which to purchase at any particular point in time?"
"Another way you can look at it is you can buy gold above ground ?that's bullion ? or you can buy gold below ground ? and that would be through mining stocks. While I did say you couldn't call gold overpriced or underpriced, we still want the cheapest ounces possible, and stocks offer a much less expensive way to get them at the moment. Since the beginning of the year, many central banks, which can only buy bullion, have been doing just that. And that's caused the prices of the mining stocks to underperform ? gold bullion is up more than 20% in 2011, but the sector ETF, GDX, is down 3.7%. Gold stocks normally show 2 to 3 times leverage on any move in bullion, up or down. So they are definitely lagging."
"Are we going back to the gold standard? I'm hearing a lot more people talk about that these days, not the least of whom is Ron Paul."
"You always have had people who think that. From our standpoint, the primary problem with the paper money system is that central bankers always have the option to print more money. It's hard for them to have the fortitude to actually deal with issues instead of inflating their way out of them. But I really doubt we're going to see a full gold standard any time soon. What we could see is central bankers realizing they all need a real allocation to gold in their foreign exchange reserves. It's been around for thousands of years, whereas paper currencies come and go. And it's accepted by both dictator and democracy alike. At the end of the day, it's the ultimate currency.?
SBL Price at posting:
1.7¢ Sentiment: Buy Disclosure: Held
