Jeffrey Gundlach is the founder and CEO of DoubleLine Capital, which is headquartered in Los Angeles. He shared his views on bonds and the gold price outlook recently. He said that US Treasuries (TLT) were not attractive despite the ten-year yield crossing the 3% threshold. He added that the core Consumer Price Index and the New York Federal Reserve’s underlying inflation gauge suggest that the inflation in the US will go higher, which could hurt government bond prices.
Breaking out to the upside?
Gundlach mentioned that gold prices (GLD) have broken their downtrend line and are on the verge of breaking out to the upside. He said, “It’s getting almost exciting…something big is happening.” Gundlach added, “Gold is maintaining an upward pattern above its rising 200-day moving average, which is extremely good.” Also, based on his classic chart reading, he suggests that “explosive, potential energy” of a huge “head-and-shoulders bottom” base could signal a move of $1,000 in gold prices.
Weaker dollar outlook and gold
Previously, he has noted that his weaker outlook for the US dollar (UUP) is behind his bullish gold outlook. He mentioned, “When you get a lousy year in the dollar, like last year, it’s very typically followed up by another year that’s bad just after.” He believes that the SPDR S&P Oil & Gas Exploration and Production ETF (XOP) is worth a look, as it hasn’t yet reaped the full benefits of the crude-oil rally. According to Gundlach, while historically, the S&P 500 (SPY) and energy prices have been correlated, this hasn’t been the case this time and there might be some catch-up due.
While Gundlach seems to be quite positive about gold, it’s a well-known fact that Warren Buffett doesn’t share his enthusiasm for gold. We’ll take a look at Buffett’s take on gold prices in the next part of this series.