(Kitco News) - Billionaire investor David Einhorn, president and founder of Greenlight Capital, is betting on gold as the Federal Reserve will be unable to get inflation under control and be forced to maintain its restrictive monetary policy longer than expected.
“I think inflation is reaccelerating. I think there’s a lot of indication of that,” Einhorn said Wednesday at the annual Sohn Investment Conference in New York.
In an interview with CNBC, the famed investor said that in an environment of elevated inflation, it’s unlikely the Federal Reserve will be able to cut interest rates three times this year. He added that there is a possibility that the central bank won’t cut interest rates at all this year.
Gold has rallied this month to record highs above $2,300 an ounce, partly in anticipation of a new easing cycle in June; however, Einhorn doesn’t expect a potential shift in the Federal Reserve’s long-awaited pivot to derail gold’s run.
Greenlight Capital has been busy buying SPRD GoldShares (NYSE: GLD), the world’s largest gold-backed exchange-traded fund, as a defensive play ahead of a potential economic downturn as the Fed maintains its aggressive monetary policy.
“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 not-so-good happening.”
According to SEC regulator filings, Greenlight Capital owns roughly $74 million worth of GLD as of the end of the fourth quarter. The fund’s GLD holdings represent 3.6% of its total portfolio.
The hedge fund has assets under management of around $2 billion.
Einhorn has been a long-term gold investor, holding significant physical bullion.
Every year, the one-day conference brings together some of the top fund managers on Wall Street as a fundraiser to support research programs for the treatment and cure of pediatric cancer.
The conference honors the memory of Ira Sohn, a Wall Street trader who lost his battle with cancer at age 29. Conference organizers say they’ve raised over $50 million since 1995.
