1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Holly LaFon
Holly LaFon
Articles (7846) 

Van Den Berg's Century Management Newsletter - Inflation, Gold, and Gold Mining Companies

February 25, 2014 | About:


•• We continue to be concerned about the increasing levels of federal debt, Fed policy and quantitative easing, and the overall lack of political will to change the present course. As a result, we believe that the probability of elevated inflation over the next 5 years has dramatically increased and have been reviewing gold as a potential investment for our portfolios.

•• During our study of gold, we arrived at a methodology that prices the commodity from five different viewpoints. Currently trading at $1,225 to $1,300 per ounce, we believe gold is selling in a fair value range.

•• While physical gold is not in our buy zone, many gold mining companies are selling as if the price of gold is currently $800 to $900 per ounce, which is 28% to 36% lower than gold's closing price on January 31, 2014, and well within our buy zone.

•• With or without high inflation in the future, we believe many gold mining companies have been selling at bargain prices and have added them to our portfolios.

We have been concerned about debt levels and the possibility of inflation or deflation for the past 10 years. We first wrote about these issues in our 70-page newsletter in December 2004, where we outlined the risks and concerns we had about various over-valued markets and the unsustainable direction of our country's finances.

Chart 1 shows there is currently $17.2 trillion in total public (federal) debt outstanding. Divided by the U.S. population, the amount of public debt translates to $54,335 worth of debt for every person in America. However, these figures do not include unfunded liabilities, such as Social Security, Medicare, Medicaid, Veteran Health Care Benefits, the Medicare Prescription Drug Bill, and the Affordable Health Care Act. These liabilities increase the total U.S. public debt outstanding to $82 trillion, or $258,254 per person. This is up from $100,000 per person just 10 years ago!

When you consider the rate at which public debt is increasing, along with the fact that so many countries around the world instituted their own versions of quantitative easing (i.e. printing money) while increasing debt levels, these conditions are unprecedented. We have found no historical example of so many major countries simultaneously engaged in quantitative easing. Just ten years ago we would not have thought such an economic environment was even possible.

Continue reading here.

Rating: 3.0/5 (4 votes)



BEL-AIR - 3 years ago    Report SPAM

This was a good read, and I have to agree with him, as it is what I am doing myself...

Please leave your comment:

More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by Holly LaFon

User Generated Screeners

DBrizan2017sep22 1045p
andrewgu999nick scali style
liuzishudeep value non-div
star1907Rule #1
star1907C3 20% Growth 5 yr
EhrlingerT. Rowe Price Group
NorvasP/S good growers
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat