Hedge fund tycoon Crispin Odey has warned that governments may ban private ownership of gold if they lose control of inflation in the wake of the coronavirus crisis.
The price of gold has soared since the beginning of the Covid-19 pandemic as jittery investors flock to safe haven assets amid a wider recession.
Odey said it was “no surprise” that people were buying gold. “But the authorities may attempt at some point to de-monetise gold, making it illegal to own as a private individual,” he wrote in a letter to investors seen by Bloomberg.
“They will only do this if they feel the need to create a stable unit of account for world trade.”
Odey, who is a vocal critic of central bank policies, upped the gold position in his flagship Odey European Inc. fund in April, according to the report.
June gold futures represented just shy of 40 per cent of the fund’s net asset value at the end of the month, up from 15.9 per cent at the end of March.
Some economists have warned that high levels of government debt racked up during the pandemic could lead to high inflation as economies recover.
While the value of the dollar is no longer pegged to gold, Odey said he feared a repeat of policies in the wake of the Great Depression, when the US government began buying up privately-held gold to bring down the value of the dollar.
“History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage,” he wrote.