Hedge fund manager Einhorn sees upside for gold and inflation

A scorching streak for gold helped gas a robust begin to the 12 months for Greenlight Capital, and hedge fund supervisor David Einhorn stated Wednesday he nonetheless sees extra upside for the yellow metallic.

The worth of spot gold has surged greater than 20% this 12 months, with most of these beneficial properties coming within the first quarter. Einhorn, the president of Greenlight, informed CNBC’s Scott Wapner that his long-term case for gold continues to be intact and that the commodity can proceed to go larger.

“Gold is concerning the confidence within the fiscal coverage and the financial coverage. And since we purchased gold in 2008 or so, it has been very clear to me that the U.S. fiscal and financial insurance policies are each too aggressive and create a threat,” Einhorn stated.

Einhorn pointed to the meager cost-cuts from the so-called Division of Authorities Effectivity, relative to the dimensions of the federal authorities’s funds, as an indication that the fiscal state of affairs is unlikely to vary any time quickly.

“There is a bipartisan settlement to do nothing concerning the deficit till we really get to the following disaster,” Einhorn stated.

The hedge fund supervisor stated that gold and different defensive positions have helped Greenlight have a robust begin to the 12 months. Reuters reported in April that Greenlight gained 8.2% within the first quarter, citing an investor letter. The S&P 500 fell greater than 4% throughout the identical interval.

Einhorn did make clear that he doesn’t view gold as an inflation wager. Nonetheless, in a associated commerce, Einhorn stated he has positions on long-duration inflation swaps, which function a wager that costs will rise quicker than the market expects.

“All of those behaviors in the end result in inflation, and better inflation,” Einhorn stated.

The feedback got here on the sidelines of the Sohn Funding Convention in New York, the place Einhorn had earlier unveiled his new funding in a German chemical firm.