'Big Short' investors are optimistic about gold due to rapid devaluation of money

According to three famous "Big Short" investors, investors should acquire more gold for the long term.

 

Danny Moses, Porter Collins, and Vincent Daniel—three Wall Streeters who profited immensely by betting against the housing market during the subprime mortgage crisis—consider gold one of their top long-term investments.

 

This is primarily due to increasing debt levels in the US, Collins stated to CNBC last Friday, with Daniel adding that they foresee a "significant debasement" of the US dollar in future years.

 

"It's excessive," Collins commented regarding the pace of government borrowing. "Consider that one dollar in your wallet. Tomorrow, what's its value?"

 

The US debt hit a record $35 trillion this year, according to US Treasury data, highlighting a rapid borrowing rate that has concerned economists for decades. Rising debt levels could increase reluctance among the US's debt purchasers—something that could trigger inflation and depreciate the dollar, economists previously informed Business Insider.

 

Collins and Daniel—the co-founders of Seawolf Capital—stated they remain bullish on gold, gold miners, and precious metals like silver in their annual letter to shareholders. The financial firm has "purchased almost every dip" in these assets over the last four years, the letter indicated.

 

Moses, the founder of Moses Ventures, noted in an email to CNBC that he had a "substantial long" position in Sprott Physical Gold Trust, which has surged 16% so far this year.

 

Gold has also outperformed US Treasurys across "any timeframe" in history, Collins added, implying it is a superior investment.

 

"I don't believe Americans have enough gold in their portfolios," Collins said. "This strategy we've held for a long time, I think it just continues. And I believe in 1, 2, 3, 5, to 10 years, you'll earn significantly more money in gold than in US Treasurys."

 

Treasury auctions have been showing signs of declining demand, partly due to ongoing concerns about the US debt balance and the prospect of higher interest rates for an extended period.

 

The price of gold has risen over 16% so far this year, with the precious metal reaching a new record of $2,465 this month.