Paul Tudor Jones on Fed, recession, and gold
We reported in Paul Tudor Jones’ Strategy for Fed Rate Cuts that billionaire investor Paul Tudor Jones spoke to Bloomberg yesterday ahead of JUST Capital’s event in New York and shared his views regarding Fed rate cuts, the recession, and his favorite trades in this environment. In the current environment, where Fed rate cuts are expected, Paul Tudor Jones’ favorite pick in the next 12 to 24 months is gold.
Gold to surge?
Jones thinks that if gold hits $1,400 per ounce, it will quickly move to $1,700. He said, “It has everything going for it.” He stated, “We’ve had 75 years of expanding globalization and trade and we built the machine under the belief that that was the way the world was going to be and now all of a sudden it’s stopped.” He added, “It would make one think that rates in the United States go back down to the zero bound level and in the course of that situation, gold is going to scream. It will be the antidote institutionally for people with equity portfolios.”
Stanley Druckenmiller suggests gold too
Jones is not the only well-known investor to turn bullish on gold lately. We discussed in Druckenmiller Suggests These Two Trades to Hedge against Meltdown that Stanley Druckenmiller dumped his other investments after Trump’s tweet on May 5 and piled into Treasuries (TLT). He said that while Treasuries 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.
After the recent risk-off environment following the escalation of the trade war between the US and China following Trump’s tweet on May 5, the SPDR Gold Shares ETF (GLD) and the VanEck Vectors Gold Miners ETF (GDX) have gained 4.3% and 13.2%, respectively, and the S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite (QQQ) have fallen 1.9%, 1.7%, and 4.6%, respectively. You can read more on this topic in A Perfect Storm for Gold: All Macro Drivers Align.