Giustra: Inflation Thesis Still Intact

Frank Giustra, a leading gold bug and one of Canada's most successful investors.

Frank Giustra took the Canadian Securities Course and began his career in the investment industry in 1978 as an assistant trader with Merrill Lynch.

In the early 1980s, Giustra left Merrill Lynch to create a resources-financing group in Europe for the new firm Yorkton Securities. In 1990, he became President of the company and, in 1995, was appointed Chairman and CEO. Over time, he transformed Yorkton Securities into a major force in the Canadian investment banking industry.

In 2002 Giustra moved heavily into gold. To coincide his move he published, “A Tarnished Dollar Will Put the Shine on Gold”. At the time, gold was trading under $300 an ounce.

From 2001 to 2007, Giustra was Chair of Endeavour Financial, a merchant banking firm which financed mining companies. He was an early mover into the sector and based his investment thesis on macroeconomic factors that were beginning to impact the world’s financial markets. His focus on “hard assets” as opposed to “fiat money” paid off and since 2001 he’s been successfully riding the mining wave.

In December, 2011, Frank Giustra reasserted his investment thesis in an op-ed piece for the Vancouver Sun entitled, “We’ve Been Down this Path Before”.

Frank writes:

“The bottom line is that the money needed to bail out Europe and to fund America’s spiraling debt and future unfunded obligations is in the ten of trillions. IT DOES NOT EXIST. It has to be created by printing money in massive quantities, and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements.”

“There will be a quantitative easing three (QE3) in the U.S. and the European Central Bank (ECB) will eventually follow suit in printing money in American-style amounts, despite Germany’s resistance to date.”

“If the world continues to print money, currencies will be debased against “tangible things” such as gold, farmland, exclusive real estate, rare art and collectibles, select equities to list a few. Therefore, having your savings invested in cash, bonds, money and markets, could mean a complete destruction of those savings by runaway monetary inflation.”

Recently, Mr. Giustra connected with Tommy Humphreys and, in the interview, you’ll find his positions on the global economy and investing are more or less the same.

Frank says (time – 19:16):

“I believe (gold is) going a lot higher…it’s going to have a parabolic spike, caused by some event or some loss of confidence…a US dollar crisis would be a perfect example. That will cause gold to go through the roof, and then everybody will want to own it…I don’t think we’re even close to that yet…  Gold will probably have a much greater run than some of the other hard assets–because it’s also a currency.”

Watch the entire interview below:

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