Greenlight's David Einhorn Is Loading Up On Gold As A Hedge Against Something 'Not So Good Happening'

Greenlight Capital’s David Einhorn is betting on gold as a hedge against inflation.

What To Know: In an interview Wednesday from the 2024 Sohn Investment Conference aired on CNBC’s “Power Lunch,” Einhorn argued that inflation is no longer going down.

"I think inflation is reaccelerating. I think there's a lot of indication of that," Einhorn said.

The billionaire investor told CNBC that he expects the Federal Reserve to cut rates fewer times this year than the market is anticipating. The consensus is that there will be three rate cuts in 2024, but Einhorn indicated that there might not be any cuts at all.

The longer the Fed maintains its aggressive monetary policy stance, the greater the chance for an economic downturn. Einhorn noted that Greenlight Capital has been buying shares of SPDR Gold Trust (NYSE:GLD) as a hedge against that possibility, but that’s not the firm’s only exposure to gold.

"We own a lot more gold than just the GLD. We own physical bars as well. So gold is a very large position for us,” Einhorn said.

“There's a problem with the overall monetary and fiscal policies of the country, and if both policies are systemically too loose, I think the deficits are ultimately a real problem, and I think that this is a way to hedge the risk of something, you know, not so good happening.”

Gold prices have rallied to all-time highs in recent weeks, partially driven by anticipation of a Fed easing cycle. Gold tends to look more attractive than fixed-income assets in low-rate environments.

When asked about the chances of something not so good happening, Einhorn said it’s simply a matter of when, although he acknowledged that he doesn’t know when that will be.

“As long as the market is confident in what's going on, everything is fine. But the minute that that changes … then there's a real problem,” Einhorn said.

Check This Out: Fed’s Continued Hawkish Stance Amid Stickier-Than-Expected Inflation Rate: A Boon For US Dollar?

GLD Price Action: The SPDR Gold Trust was up 0.11% at $213.03 at the time of publication, according to Benzinga Pro.

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