The “Bond King”- PIMCO’s Bill Gross says Buy Gold!

Bill Gross says to buy gold not bonds. In an interview on Bloomberg News today, Mr. Gross said that to continue believing that stocks or bonds can return 10% is a dying belief. Mr. Gross commented that, “Gold cannot be reproduced. It could certainly be taken out of the ground at an increasing rate but there is a limited amount of gold. And there has been an unlimited amount of paper money over the past 20 to 30 years now – in this period of central bank expansion where it’s QE1 or QE2, or whether it’s the LTROs of the ECB or this potential new program…then central banks are at their leisure to print money.” He further goes on to say that with central banks writing checks for trillions of dollars, it is a good idea to own something that cannot be reproduced such as gold.

Profit taking is the most probably reason that precious metals markets are down slightly this morning. The big event this week is the Wednesday-Thursday Federal Reserve meeting and the high expectation of many, that Fed Chairman Bernanke will announce QE3 on September 13. The sluggish jobs report on Friday might be the event the finally triggers this announcement. The ECB and China announced stimulus plans last week.  many expect the U.S. to be next.

At 9AM EDT the APMEX precious metals prices were:

  • Gold price – $1,731.30 – down $8.30
  • Silver price – $33.50 – down 19 cents
  • Platinum price – $1,594.50 – down $2.80
  • Palladium price – $659.00 – up $4.30
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Fed Chairman Leaves Markets Guessing

Precious Metals have rebounded from early session declines, as Federal Reserve Chairman Ben Bernanke’s testimony again did little to indicate when or what actions the Fed might take to simulate the economy. In short, he simply restated the Fed’s pledge to to act if needed. “The Gold market’s reaction is suggesting that we are not going to get any stimulus anytime soon until the economy deteriorates much further,” said Phillip Streible at futures brokerage R.J. O’Brien. “I think these markets are going to be in a trading range for a while,” he said.

Feedback from some in Congress to Bernanke’s testimony was that the Federal Reserve is the best hope for economic stimulus. “Given the political realities, particularly in this election year, I’m afraid the Fed’s the only game in town,” said Sen. Charles Schumer (D-NY). “I would urge you to take whatever actions you think would be most helpful in supporting a stronger economic recovery.”

The man who runs the world’s largest mutual fund feels the United States is indeed nearing a recession and expects the Federal Reserve to take more steps to help economic growth. The United States is “approaching recession when measured by employment, retail sales, investment, and corporate profits,” said Bill Gross, who manages the $263 billion Pimco Total Return Fund.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,589.90, Down $3.20.
  • Silver, $27.38, Down $0.03.
  • Platinum, $1,420.00, Up $2.70.
  • Palladium, $585.10, Up $6.30.

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