Paul Singer, the hedge-fund billionaire behind Elliot Management, warned last month that the ultimate path of global stock markets is a drop of at least 50% from February highs.
What’s an investor to do in the face of such a grim outlook? Load up on gold, perhaps. After all, according to a report this week from the Financial Times, that’s what the smart money’s doing.
Gold, advised Singer, is “one of the most undervalued” assets available and it’s worth “multiples of its current price” due to the “fanatical debasement of money by all of the world’s central banks.” His fund gained about 2%, the FT reported, thanks primarily to profits from its gold position.
Andrew Law’s Caxton Associates and Danny Yong’s Dymon Asia Capital have joined Singer in seeking protection in their gold positions amid further loosening monetary policy.
“Gold is a hedge against unfettered fiat currency printing,” said Yong, whose fund is up 36%.
Caxton has also enjoyed double-digits gains, the FT reported, with its Global fund rallying some 15% and its Macro fund logging a 17% jump so far this year.
On Tuesday, however, gold GC00, 0.01% was headed for its first loss in three sessions, amid optimism about the easing of business lockdowns in the U.S. and Europe.
“Risk appetite among investors improved with moves by major economies to ease lockdowns related to the coronavirus crisis,” analysts at ICICI Bank, wrote in a market update.
That hunger for risk was on display in the stock market, with the Dow Jones Industrial Average DJIA, +0.56% up more than 300 points. The S&P 500 SPX, +0.90% and Nasdaq Composite COMP, +1.13% were also firmly higher in Tuesday’s session.