$4,000 Gold?

The story that sticks in our mind this week is the prediction by John Paulson that gold could hit $4,000. We first read of his comments on a Web site called Goldalert.com, which reported that the hedge fund multibillionaire had recently told a luncheon group at private club in New York that he reckoned gold, which at the time was a few dollars below $1,300, “could hit $2,400 based only on monetary expansion,” as Goldalert paraphrased him, “and as high as $4,000 per ounce based on a projected overshoot.” Goldalert said that Mr. Paulson noted that 80% of his assets are denominated in gold. Robert Lenzner of Forbes, who first reported Mr. Paulson’s remarks, said Mr. Paulson told “a standing room only crowd” at the University Club that, in Mr. Lenzner’s wording, “double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold.”