Jeffrey Gundlach and Paul Tudor Jones Agree: GOLD is your Best Bet

by Lear Capital EditorialJune 27, 2019

Citing recession risk and trade wars, these two legendary money managers have both recently come out strongly in favor of gold.

Many big names in the financial world have been flocking to gold recently and it’s no wonder. Trade wars are threatening to put a major drag on global markets. The Fed is back to considering CUTTING interest rates, signaling cheaper money may be ahead of us. Debt and deficits are becoming crippling to the economy, and though things may still look good on paper, people are losing faith in that paper.

In fact, consumer outlook is a MAJOR reason DoubleLine CEO Jeffrey Gundlach puts recession risk at a 40-45% chance in the next 6 months, rising to a 65% chance in the next year. There is a big disconnect between current economic conditions and how people feel about the future. Gundlach has literally made billions paying attention to these kinds of disconnects. You should pay attention, too.

"I am certainly long gold." - Jeffrey Gundlach

In a recent investor webcast, DoubleLine CEO Gundlach said he expects the dollar will end the year lower, with gold moving in the typical opposite direction. His indicators predict a 40-45% chance of recession in the next 6 months, rising to a 65% chance within the next year. He thinks the deficit is setting off alarm bells and even with low interest rates, payments on government debt are going to absorb a record percentage of GDP. All of this, along with tumbling consumer confidence expectations, tells him gold is an excellent safe-haven bet right now.

“I think gold goes beyond $1400… it goes to $1700 rather quickly.” – Paul Tudor Jones

Hedge Fund manager Paul Tudor Jones is following trade war and tariff issues very closely and considers them a potential economic game changer. Citing 75 years of expanding globalization and free trade, the sudden reintroduction, continuation and expanding of tariffs (and retaliatory tariffs) could mean a drastic economic realignment that could launch gold prices very quickly. Jones stated that "the tariffs are a very material event. We haven’t had any experience in modern times with them, so you have to re-adjust the entire outlook." Ultimately, he sees the potential for a protracted global slowdown, and the Federal Reserve cutting interest rates in response. Low interest rates mean cheaper money and cheaper money sets gold up to “scream” as he puts it.

Is Gold Right for Your Portfolio?

We think these are extremely strong reasons to shore up your own personal gold and precious metals reserves rather than fully relying on paper. But the truth is these specific reasons, although sound and logical and given by important financial minds, are only prognostications and guesses at future trends. Could they be wrong about what will happen in 6 months? In a year? Sure, they could. They manage billions of dollars’ worth of assets because they have been right more than wrong, but yes, they could be wrong.

An even stronger bet is the very long term – 10, 20 years down the road. The Trump administration will be in the history books and where will the price of gold be? Where will the dollar be? What will happen to the cost of living?

Gold is a long term “buy and hold” in a different way than other assets. Don’t buy gold today and expect to sell at a profit in a few months. Buy it today and it will mean your family always has something, come what may, in the decades to come.

And whatever you do, do not lament over the low price of gold in the interim! That merely means gold is on sale, giving you an opportunity and an advantage. Since 1935, the long-term trend for gold has always been up. But that is admittedly less a factor of gold increasing, and more a factor of the dollar decreasing. Are you fully dependent on the value of the dollar in all your investments? You should seriously rethink that, if so.

Find out how Gold can bolster your portfolio!

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