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More Stimulus Coming? Get Into Gold, Art, Jewelry: Strategist

Wednesday, 13 Jul 2011 | 11:48 AM ET

There may be another round of quantitative easing in the U.S. and Europe remains volatile. What's an investor to do? Get into gold, art and jewelry, Scott Minerd, chief strategist at Guggenheim Partners, told CNBC Wednesday.

Euro Zone: Fears & Facts
The smart play is to get out of European assets, says Scott Minerd, Guggenheim Partners; with Frank Engels, Barclays, who weighs in on investor sentiment on Europe.

"We're in a 'beggar thy neighbor' era. Paper money is garbage at the end," he said. "It's a matter of relative values, about which garbage do you own."

There's gold, of course, but "I don't want to get labeled as a gold bug," Minerd said. "I'm in favor of any asset class which is a store of value, which gets you away from currency risks," and that would include art, collectibles and diamonds. Over his long-term horizon, "all of these noncurrency-related assets are probably superior investments than looking at financial assets."

Minerd has long predicted the Federal Reserve would start buying bonds again to stimulate the economy. He spoke before Federal Reserve Chairman Ben Bernanke made his semi-annual visit before a House committee to testify on the state of the U.S. economy, at which point he said a new stimulus program is in the works.

"I've gone on record early on that QE-3 is a real probability," Minerd said of a program to replace the second round of quantitative easingthat ended June 30. "I would almost say it is inevitable."

However, that could help U.S. stocks. Minerd likes equities in the long run because he expects strong earnings. "With QE-3 in the wings, there will be positive momentum under earnings," he said. "The United States is not going to reach stall speed, we are not going to have a recession here."

That's why Minerd would recommend dollar-denominated assets over European assets, where every announcement of a possible Greek or Italian default causes markets to panic.

"I tend to be optimistic," he said. But "the reality is, the smart play at this point is to get into dollar-denominated assets, get out of European assets, and look for hedges against risk like gold—things that will hold up fairly well in a crisis."

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