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Billionaire Sees 70’s Style Inflation, Bullish on Gold for First Time

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Billionaire Sam Zell, a legendary investment manager worth about $5.4 billion, is bullish on gold for the first time in his career due to inflation concerns. Zell says that he’s seeing inflation reminiscent of the 1970’s everywhere and is buying gold as a hedge.

According to this Bloomberg article, Zell said, “It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

Many have debated what the best hedge against inflation is. Some argue that Bitcoin is a strong hedge against inflation, but those arguments are hypothetical for now since Bitcoin hasn’t been around for any sustained period of inflation. While Bitcoin has enjoyed phenomenal success over the last decade, its rise is more correlated with the tech stock bull market than anything.

Other inflation hedging strategies include owning real assets that will still have intrinsic value even if the US dollar depreciates rapidly. These could include direct investments into real estate or owning stock in companies that produce or control commodities like corn, wheat, lumber, etc. We wrote about inflation hedging ideas in this recent edition of Alpha Letter.

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