Hinde Capital: “One of These Days I Think Gold Will Go To $5000—But When It Does, Nobody Will Own It”

\”BullMarketThinking.com\”

I had the chance this week to connect with Mark Mahaffey, co-founder and CFO of the London-based Hinde Capital, manager of the physically-backed and allocated, Hinde Gold Fund. The Hinde Gold Fund has been one of the world’s top performing gold funds, even amidst the shocking metals correction over the last week.

During this fascinating interview, Mark indicated that despite deflationary sentiment creeping into commodity markets, within two years, we could see a hyper-inflationary ”tipping point”, accompanied by catastrophic rises in interest rates, market failures, and shocking government confiscations. 

In a recent written piece Mark likened central bank money printing to, “The children’s game “Buckaroo”…[which] involves gradually adding weights to a spring loaded donkey before it bucks and everything falls off—the proverbial binary tipping point.”

Speaking to the potential of this hyper-inflationary tipping point, Mark said, “It obviously sounds like a ridiculous call…[but] in Japan [it's already] starting…The Nikkei is up 50% in the last 6 months. Do you think that’s because the Japanese economy is doing well? They’re just printing the money. Nobody seems to want to [believe it]—I don’t want to believe it…[but] as I mentioned in that article about the children’s game, “Buckaroo”, there is the binary [point], where you just print ‘one more’ bit of money [and everything falls apart]…[However] people think that because we’re doing it electronically by bond purchases…that it’s not the same as actually printing the dollars and handing them out.”

Decades of market and social stability have set up a psychological trap for many according to Mark, as “We have this natural inbuilt optimism based on forty years of ‘good things’ happening and bull markets. It means that we don’t worry as much as we should. If you worry, you’re called a paranoid, pessimist…[But] effectively, all countries that are in debt are potentially at risk of catastrophic situations where the debts have to be repaid in some shape or form. Whoever owns the debt, or whoever is a creditor of an institution [is] going to lose out. Anyone who buys a government bond here…at zero percent is going to lose money.”

The ”loss of money” in debt markets will be anything but gradual Mark indicated, saying that, “The next stage from zero interest rates [isn't] a ‘gentle raising’ of interest rates…that’s [not] how [it] works. I remember 1994 quite clearly, and interest rates went from 3.00% to 3.25% in the U.S., and people thought that was enough.
Source: