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Gold is starting to take the place of big tech - Mohamed A. El-Erian

Kitco News

With U.S. treasury yields set to fall, investors are starting to cycle into solid, real assets like gold, said Mohamed A. El-Erian in an interview with Bloomberg.

During an interview posted on Friday, the former Chief Economic Advisor at PIMCO said that the narrative that has been driving big tech is now true of gold.

"What's interesting about gold is that it's starting to become everything to everybody. People like it because it's defensive. People like it because it's a reflationary trade. People like it because its inflation protection," said El-Erian.

"So the narrative of gold is similar to the narrative with big tech: it gives you everything."

Treasuries are holding less appeal. Scott Minerd of Guggenheim Investments told Reuters that he expects U.S. treasuries to dip into negative territories with Federal Reserve Chairman Jerome Powell keeping interest rates near zero indefinitely while Powell waits for the economy to regain its footing.

Tech stocks have out-performed other sectors by significant margins this year.

El-Erian said people are moving partially out of treasuries and looking at a basket of assets that will act as a risk mitigator.

"What I've seen smart people do is combine treasuries, high-quality investment grade and solid real assets," said El-Erian.

"It's that allocation that is replacing just an allocation to treasuries.

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