Falling currency yields and continuing uncertainty over the worldwide economy have sparked a new gold rush in the global hedge fund industry. According to the Financial Times, investment pools that have traditionally avoided gold investments are buying up the precious metal at a sometimes record pace as a way of betting against central banks and paper currencies.
These "gold bulls" include funds that last year bet against investment banks like Lehman Brothers being able to cover their exposure to a collapse in US house prices.
One such fund manager, David Einhorn of Greenlight Capital, wrote to investors last week stating that he is buying gold because the US dollar is "being debased" as the Federal Reserve takes on more and more debt.
"Deflation will lead to further steps to debase the currency, while inflation speaks for itself," he added.
Peter Munk, the founder of the world's largest gold miner Barrick, recently said that the price of metal's price could break the $2,000-per-ounce barrier if central banks shift some of their dollar reserves into gold.
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