Greenlight Capital’s David Einhorn is turning to gold as a safeguard against inflation.
David Einhorn’s Perspective: Speaking from the 2024 Sohn Investment Conference on CNBC’s “Power Lunch,” Einhorn expressed his belief that inflation is on the rise.
Einhorn emphasized, “I think inflation is reaccelerating. I think there’s a lot of indication of that.”
The acclaimed investor revealed his expectation that the Federal Reserve may cut rates less frequently this year than the market predicts. While market consensus suggests three rate cuts in 2024, Einhorn suggested the possibility of no cuts.
Continued aggressive monetary policies by the Federal Reserve increase the likelihood of an economic downturn according to Einhorn. In response, Greenlight Capital has been increasing its holdings in SPDR Gold Trust (GLD) as a precautionary measure, alongside additional investments in physical gold bars.
Einhorn elaborated, “We own a lot more gold than just the GLD. We own physical bars as well. So gold is a very large position for us.”
He added, “There’s a problem with the overall monetary and fiscal policies of the country, and if both policies are systemically too loose, I think the deficits are ultimately a real problem, and I think that this is a way to hedge the risk of something, you know, not so good happening.”
Gold prices have surged to record highs recently, partly fueled by expectations of an easing cycle by the Federal Reserve. In environments of low interest rates, gold often appears more appealing than fixed-income assets.
Addressing the likelihood of unfavorable events, Einhorn mentioned that it is a matter of ‘when,’ though he admitted uncertainty regarding timing.
“As long as the market is confident in what’s going on, everything is fine. But the minute that that changes … then there’s a real problem,” Einhorn cautioned.
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GLD Price Action: At the time of publication, the SPDR Gold Trust was up 0.11% at $213.03.
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