Why Gundlach and Einhorn Are Betting on Gold

Jeffrey Gundlach recommends gold

The so-called “bond king” and the CEO of DoubleLine Capital, Jeffrey Gundlach, said during Barron’s 2019 Roundtable that “Gold and commodities broadly should benefit this year.” He added, “To be aggressive, you could buy the VanEck Vectors Gold Miners ETF [GDX]. It is a leveraged play on the price of gold. That is what I recommend.” He liked gold on the prospects of a weaker US dollar (UUP) (USDU) going forward.

Why Gundlach and Einhorn Are Betting on Gold

David Einhorn uses gold as a hedge

David Einhorn, the CEO of Greenlight Capital, is also positive on gold. As reported by CNBC, in a letter to shareholders, he said that he is using gold as a hedge against “imprudent” global monetary and fiscal policies. He is also concerned about the US (SPY) (IVV) debt hitting new limits. He thinks “When the economy eventually slows, the deficit is sure to expand rapidly.”

Sam Zell buys gold for the first time

Bloomberg reported that Sam Zell, the founder of Equity Group Investments, bought gold (GLD) (IAU) for the first time. Zell said, “For the first time in my life, I bought gold because it is a good hedge.” He added, “Supply is shrinking and that is going to have a positive impact on the price.” The discovery of new gold has become very rare. Moreover, gold miners (GDX) (JNUG) are focusing on mergers and acquisitions to grow rather than growing organically, which should keep gold’s supply in check.

In addition to the above-mentioned investors, Ray Dalio, Bridgewater Associates’ founder, also recommends investors hold 5%–10% of their portfolio in gold.