Bill Gross Forecast : INFLATION

Organization of the Federal Reserve System (Photo credit: Wikipedia)

Note : I am about caught  up – after two weeks of being away. I want to be sure to post this article for you because Bill Gross is a guru AMP watches ( and because  his inflation forecast agrees with my thinking.  I have an ego.)

The original article was released October 10 and carries great weight in our gold portfolio and the AMP Gold and Precious Metals book conclusions and selections.

Gross wrote in his monthly investment commentary last week that the U.S. will no longer be the first destination of global capital in search of safe returns unless fiscal spending and debt growth slows, saying the nation “frequently pleasures itself with budgetary crystal meth.” Mortgages have accounted for 50 percent of the fund holdings since January as Gross correctly bet the Federal Reserve would announce a new round of monetary stimulus using the securities.

“An investor or bond fund or equity fund has to make a bet on reflation or deflation, and recognize that the market power currently rests with central banks,” Gross said during an Oct. 5 radio interview on “Bloomberg Surveillance” with Tom Keene. “‘We are betting at Pimco on reflation. We don’t want to fight the Fed, but we want to be afraid of the inflationary consequences.”

Gross eliminated U.S. government-related debt from the fund in February 2011 and said in March of that year that Treasuries needed to be “exorcised” from portfolios. The fund lost against 70 percent of its peers that year, prompting Gross to capitulate and buy U.S. government debt. The company’s flagship fund has beaten 96 percent of its peers the past year, Bloomberg data show.

Asset Classes

Treasuries have returned 1.9 percent this year, while mortgages gained 2.7 percent, according to Bank of America Merrill Lynch indexes.

The Total Return Fund raised its holdings of non-U.S. developed nations’ debt to 11 percent in September from 7 percent in August. Gross kept emerging-market debt to 8 percent and investment-grade credit at 12 percent. High-yield debt was unchanged at 2 percent of holdings.

Gross also kept the Total Return Fund’s net cash-and- equivalent position at negative 6 percent. 

Related articles

• Bill Gross – Forecasts Q3 And More (ampgoldportfolio.com)