Future direction of financial markets
As far as the future direction of the financial markets is concerned, billionaire investor Stanley Druckenmiller is not so sure. After dumping his other investments after Trump’s tweet on May 5, he piled into Treasuries. When he bought them he wasn’t sure if rates were going down but he was sure that they were not going up. He had previously noted that buying two-year Treasury notes (SHY) in late 2000 was one of his best trades ever.
Druckenmiller thinks Fed rates are going to zero
As Bloomberg reported, Druckenmiller mentioned that he could see the Fed rates going to zero in the next 18 months if the economy softens further. Since May 5, bond prices have jumped while the yields have slumped. The yield on the ten-year Treasury security (BND) has plummeted ~400 basis points. He said that while Treasuries (TLT) might have become less interesting after their recent rally, they are “the best game in town” if the economy deteriorates. He also likes gold (GLD) in this environment.
Druckenmiller’s gold bet
Druckenmiller dumped his gold (GLD) holdings the night before Trump’s election. However, he could not resist the metal for long and again dipped back into it in December 2016 and January 2017. He had wanted to buy currency, but no country wanted its currency to strengthen, so he bought gold (JNUG) instead, which was attractively priced.